North Hollywood-based Miller Kaplan, the largest accounting firm in the San Fernando Valley by personnel, has promoted Jun Wang to partner in its tax division, marking the first partner addition to the firm this year.
Wang has been at the firm for over 12 years, rising the ranks from tax accountant to senior tax manager. She joins a team of five partners overseeing clients including family groups, funds and businesses. Her appointment was made official on Jan. 4.
“I am honored to be joining the partnership,” Wang said. “I’m especially looking forward to working with my fellow partners to further strengthen our tax practice and to continue mentoring the next generation of accountants.”
Wang specializes in tax planning and consulting for clients within the entertainment, food and beverage, real estate and retail spheres.
The tax consulting industry’s slowdown is predicted to continue this year, as an uncertain economic outlook forces companies to cut outside contracting services. According to a report published by Source Global Research, the tax advisory market is expected to grow only 4% this year to $55.3 billion, down from an already stagnated 5% from last year.
“We are proud to have Jun join the partnership,” said Michael Kaplan, managing partner at Miller Kaplan. “Her commitment to excellence and focus on advancing our tax practice will ensure continued success for our clients and the firm.”
SinceMiller Kaplan is one of the larger firms headquartered in California, the state’s new tax initiative could bring in new wealthy clientele looking for budgetary assistance
As of Jan. 1, California officially initiated a tax increase for higher-wage earners passed in 2022.
The new law eliminated the $153,000 income cap for a 1.1% tax on wages to fund the state’s short-term disability program.
Miller Kaplan has maintained a strong partner track recently, as Wang joins five other promotions within the past year to the senior position at the firm. Jeff Worsham was one of the new partners named in August, and works with Wang in the firm’s tax and consulting service arms.
Aid: One of the ambulances that Antelope Valley Medical Center has leased from MedResponse.
Antelope Valley Medical Center in Lancaster is creating its first ambulance fleet to help address a shortage of ambulances in the Antelope Valley region.
Officials with the 420-bed medical center last month announced they had decided to lease two dedicated ambulances from El Monte-based MedResponse LLC. Financial terms of the deal were not disclosed.
The two ambulances will primarily transport patients to skilled-nursing facilities, acute rehabilitation centers, other high-level care facilities or patients’ homes. They will not be used for emergency transport of patients to the hospital.
The aim is to help address a regionwide shortage of nonemergency ambulance service due to labor shortages, long delays for new ambulances and low reimbursement rates from the state’s Medi-Cal program. In late 2022, one of the nation’s largest ambulance services, Greenwood Village, Colorado-based American Medical Response Inc., cut ambulance service to seven hospitals in Los Angeles County, eliminating approximately 28,000 non-emergency transports per year.
This cutback in service has come as an aging population has resulted in steadily increasing demand for non-emergency transports to skilled nursing, rehabilitation and other medical facilities, particularly following surgical procedures done in hospitals.
It’s against this backdrop that Antelope Valley Medical Center decided to add its own ambulances and to staff the ambulance transports. The hospital had been averaging about seven patient transports a day. What’s more, the hospital’s 1,500-square-mile service territory is unusually large for a hospital in Los Angeles County, making for longer-duration transports.
According to the announcement, having its own ambulance service means Antelope Valley Medical Center will help ensure a continuity of care during the patient transition between medical facilities, thereby reducing stress for patients and their families and caregivers. It also will enable the hospital to better coordinate and streamline ambulance dispatch.
“We’re not in the transportation business, but we had to make a strategic decision for a complex issue,” Edward Mirzabegian, the medical center’s chief executive, said in the announcement. “By directly managing our own fleet, we can maintain a higher level of control over response times, quality of service, and overall patient satisfaction.”
Pharmavite, a West Hills vitamin and supplement company, has acquired Bonafide Health, a women’s health products company based in Harrison, New York, for $425 million.
Pharmavite, founded in 1971, is best known for its NatureMade brand of vitamins, along with its MegaFoods nutrition product line. It’s a subisidary of Tokyo-based pharmaceutical and nutraceutical firm Otsuka Holding Co., which acquired the company in 1989. Otsuka Holding reported $13 billion in revenue in 2022.
Bonfide Health was founded in 2017 to provide women with safe and effective options for relief during menopause. The company has a portfolio of drug- and hormone-free products to treat menopause symptoms and other women’s health issues associated with aging, such as vaginal dryness.
Through its acquisition of Bonafide Health, which was announced on Nov. 30, Pharmavite is expanding and complementing its existing women’s health product lines.
The company developed a product called Equelle to treat menopause and other symptoms related to estrogen decline. Pharmavite began selling Equelle in Japan in 2014 and in the United States five years later.
In 2021, Pharmavite acquired Uqora, a San Diego company that developed products to treat urinary tract infections.
Now comes the purchase of Bonafide.
“This (Bonafide) acquisition positions us as the nation’s leading women’s health nutraceutical company, signaling a new era of innovation and science-based solutions in this underserved space,” said Jeff Boutelle, Pharmavite’s chief executive. “Bonafide’s unwavering commitment to research, development, and robust scientific evidence mirrors Pharmavite’s rigorous standards, while its deep relationship with health care professionals aligns with our goal of ensuring nutrition education is at the forefront of the industry.”
As for Bonafide Health, its chief executive and co-founder, Michael Satow, said the company had been searching for a partner for a while.
“We’ve been looking for the right partner to grow the business and reach more women that need support,” Satow said.
“Pharmavite deeply understands the importance of the model we’ve built, from the rigorous scientific data that underpins our products to the power of the work we do with the doctors and other health care providers who are having conversations with women across the country looking for better solutions,” Satow added.
Besides the purchase price of $425 million, no other financial terms of the transaction were disclosed.
According to Pharmavite’s announcement, Bonafide will continue to operate out of its current headquarters. Pharmavite also indicated it does not plan any workforce reductions as a result of the acquisition. According to the website Pitchbook, Bonafide Health has about 80 employees.
Pharmavite currently employs about 1,750 and was already planning to add another 225 to that total when it opens a $200 million, 225,000-square-foot factory in New Albany, Ohio – a suburb of Columbus – toward the end of this year. Pharmavite’s last manufacturing expansion took place in 2013 with a facility in Opelika, Alabama, which has since grown to full capacity.
Pharmavite was advised on the Bonafide Health acquisition by Century City-based Houlihan Lokey Inc. Bonafide Health was advised by New York-based William Hood & Co. and San Francisco-based Evolution Life Science Partners.
Impact: The businesses on Van Nuys Boulevard face disruption. (Photo by David Sprague)
Regarding the article “New East Valley Metro Plan Unleashes Unease” in the Jan. 1 issue of the Business Journal, I want to correct misinformation in the story and personally address how Metro is working to be a good neighbor and support local businesses. The East San Fernando Valley Light Rail is the backbone of a network of improvements that Metro is delivering to greatly improve mobility and foster economic vitality in the area.
Still, construction projects can cause significant impacts to businesses and the community, and we understand why community members might be concerned. That’s why we are applying lessons learned from other projects and implementing aggressive and proven strategies to ensure that San Fernando Valley communities thrive during the construction period and come out on the other side more connected.
Some of the ways we are supporting businesses impacted by construction include:
• Business Interruption Fund of up to $60,000 annually per qualifying business to offset revenue loss during progressive and heavy construction. This fund started in 2015 as a pilot program and, based on its success in supporting businesses along the K Line, as well as the Regional Connector project, where more than 94% of businesses, remained in operation post-grant award. In fact, for the K Line, 74% of small businesses that received a BIF grant were still in operation when the Line opened in 2022 after eight years of construction and a pandemic. As a result, the Metro board expanded it to include the East San Fernando Valley project as well. To date, it has awarded just under $40 million, and measures of its effectiveness can be seen at businesses along the K line, Purple Line extensions and the Regional Connector stations.
• Business Solution Center partners with local community-based organizations to provide business-support services, such as website development/enhancements, business planning, legal services, accounting assistance and help with internal operations to small businesses impacted during construction.
• Loss of Goodwill and Relocation Funds of up to approximately $37 million to persons and businesses displaced by the project so they can continue to thrive. Metro will guide displaced businesses through the relocation process and explain how to claim relocation and loss of goodwill funding.
• Eat, Shop, Play supports local businesses with marketing and/or resources to mitigate construction impacts. This is a no-cost program, and businesses may apply at metro.net/eat-shop-play. Metro works with individual businesses by reviewing their operations and developing a plan for how best to help them maintain awareness of their businesses and the services they provide. Some of this support may include helping them refine business practices and/or helping them with advertising, social media training and other marketing-related business services or skills.
We’re committing to building strong relationships with those who live and work in the San Fernando Valley. Some of the ways we are doing this are:
• Activating our Community Leadership Council, an advisory group comprised of community leaders who will advise on and support outreach and engagement efforts throughout the construction of the project. The members of the Community Leadership Council were selected after a multimonth application/interview process. And those selected to join the CLC represent an array of active community leaders from community-based organizations (such as Holos Communities, Valley Economic Alliance, Neighborhood Legal Services, MEND and others), small-business representatives, area residents and members of the area neighborhood councils.
• Hosting Community Meetings in multiple languages throughout the construction period led by the dedicated Construction Relations Team. Meetings are conducted both virtually and in-person, with in-person meetings featuring an accompanying open-house segment.
• Demonstrating Cultural Competency, a first-of-its-kind Metro mandate to ensure consideration of race, ethnicity, gender, immigration status, languages spoken, socioeconomics and public transportation dependency. In working with San Fernando Transit Contractors, this joint-venture team has identified at least 20 CBOs to engage as part of the preconstruction design-build process, with a particular focus on Spanish-language outreach.
Metro is committed to being a trusted community partner. We are proud that we are bringing a historic level of investment of $3.5 billion into this community, while also implementing a robust local-hire program, which prioritizes hiring residents from the community.
And we are excited about what’s to come with the new 6.7-mile light-rail line that will connect the communities of Van Nuys, Panorama City, Arleta and Pacoima along Van Nuys Boulevard, one of the Valley’s busiest corridors.
In addition to the light rail, we’re bringing speed and safety improvements to our main bus line, adding bus priority lanes to Roscoe, partnering with the city of Los Angeles on transit signal priority and shade structures, and increasing the frequency of North Valley buses to 10 minutes or better by 2025.
We look forward to seeing you in the community. Our next construction update meeting is online on Feb. 29 at 6 p.m. (https://bit.ly/esfvmtg). For more information about the East San Fernando Valley Light Rail Transit Project, and other Metro programs, please visit www.metro.net/projects/east-sfv/
Thank you for the opportunity to elaborate on our efforts to be a good neighbor and partner. I look forward to supporting the local community as this project gets underway.
Stephanie Wiggins is chief executive of the Los Angeles County Metropolitan Transportation Authority.
Arcutis Biotherapeutics Chief Executive Frank Watanabe.
Westlake Village-based immunodermatology company Arcutis Biotherapeutics Inc. has received approval from the Food and Drug Administration for a topical foam version of its main drug to treat seborrheic dermatitis in individuals aged 9 and older. The approval, announced last month, marks the first new method of application for a drug to treat seborrheic dermatitis in more than 20 years.
Seborrheic dermatitis is a chronic recurrent inflammatory skin disease that affects more than 10 million people in the United States. In most people, it is marked by red patches covered with large, greasy, flaking yellow-gray scales, and persistent itch. It occurs most often in areas of the body with oil-producing glands, including the scalp, face, upper chest, and back. Hair-bearing areas make applying topicals like creams, gels and ointments difficult.
Arcutis’ breakthrough drug roflumilast is a phosphodiesterase-4 inhibitor that increases the body’s production of one enzyme that blocks the body’s inflammation response and decreases production of another enzyme that boosts the body’s inflammation response. In July 2022, the FDAapproved a cream formulation of the drug, which is marketed under the name Zoryve, to treat plaque psoriasis in patients age 6 and older.
But topical creams are hard to apply in areas of the body that have a lot of hair or are hard to reach. That prompted Arcutis to develop a foam thatuses a propellant to enable the drug to be applied in hard-to-reach places. This allows the drug to be used for seborrheic dermatitis, which often thrives in these areas.
“We are thrilled with this FDA approval and are excited to bring to market a new, highly effective steroid-free topical formulation that can be used anywhere on the body,” said Frank Watanabe, chief executive of Arcutis. “Our commercial team is ready and poised to launch Zoryve foam very soon, and we are committed to ensuring affordable access to Zoryve foam to those who may benefit from this novel treatment.”
Hollywood: Rooftop deck at Front Porch’s Kingsley Manor facility.
Glendale-based senior and affordable housing nonprofit Front Porch Communities and Services has received strong financial ratings from two credit rating agencies.
Both Fitch Ratings and Standard and Poor last month gave the large senior housing organization A ratings with a stable outlook, as well as an A- rating on bonds issued on behalf of Front Porch.
The high marks come two years after Front Porch’s merger with fellow California-based senior housing network Covia closed, expanding its portfolio reach to become one of the largest nonprofit senior living providers in the country. The company now houses more than 7,500 residents and operates 61 communities.
Both agencies said the company’s economy of scale could yield greater operational efficiency.
“We were very transparent with the analysts about what we are up to, emphasizing elements of our strategic planning work that require us to continue to invest in the creation of this ‘new’ Front Porch,” said Sean Kelly, the company’s chief executive.
The agencies’ ratings referred to the combined $405 million in California Statewide Communities Development Authority Revenue Bonds issued to Front Porch over the past two years. These tax-free debt securities refinanced existing bonds Front Porch had prior to its merger with Covia and allowed for the company to refund outstanding variable-rate debt to a long-term fixed interest rate.
With high occupancy rates noted in both financial ratings, Front Porch has a healthy revenue flow as the aging-services industry faces headwinds. The company’s high occupancy rates and patient-service participation stand out as many in the sector struggle with labor shortages and low Medicaid reimbursement rates.
It’s been a rough couple of months for investors in – and employees of – Thousand Oaks-based immunotherapy company Atara Biotherapeutics Inc.
On Nov. 8, Atara announced the failure of a clinical trial for its lead drug to treat multiple sclerosis to reach its desired endpoint, prompting the company to pare back its work on the drug and refocus on its other drug programs. The company’s share price tumbled 80% on the following trading day to 24 cents and has remained in penny stock territory ever since.
By Dec. 31, Atara had laid off 73 employees in California as part of a 30% reduction in its workforce. About 48 of those workers were at its Thousand Oaks headquarters. The layoffs were part of a corporate restructuring announced just days before the results of the failed clinical trial became public.
There have been some positive developments at the company in the last two months, including the expansion of a partnership/licensing deal with a European pharmaceutical company, the sale of $15 million worth of shares to affiliates of an existing investor and some promising news on another drug in the company’s pipeline.
But so far, these developments have not significantly lifted the share price. Investors remain cautious, as the track record for biotech companies that experience a clinical failure of their leading drug candidate is spotty at best.
Touchon
“Can companies overcome clinical setbacks when their lead program has a significant failure? The short answer is, maybe,” said Laura Chico, managing director of equity research on the life sciences team of downtown-based financial firm Wedbush Securities Inc.
Much depends on the strength of other drug candidates in the company’s portfolio and whether the factors behind the clinical-trial failure extend to those drug candidates, Chico added.
Clinical trial fails
In the case of Atara, the clinical trial failure came as a surprise, since data from a previous clinical trial of the drug had shown some positive results.
The drug, known by the temporary name ATA188, was developed off Atara’s T-cell platform based on the Epstein-Barr virus; the company was testing it to treat non-active progressive multiple sclerosis, a form of the disease with few other treatment options.
During a Phase 1 clinical trial to test the drug’s safety profile, the drug had shown a 33% improvement in the disability status of multiple sclerosis patients. But in the Phase 2 clinical trial – known as Embold – designed to test the drug’s effectiveness, patients given the drug only showed an improvement of about 6% in their disabilities, while patients taking a placebo showed a 16% improvement in their disabilities, meaning the placebo was more effective than the drug.
“We are surprised and deeply disappointed with the results of Embold, particularly for the MS patient community, which is in urgent need of new treatment options,” Pascal Touchon, Atara’s chief executive, said in a press release at the time. “We are further evaluating the Embold data as we continue to believe in the critical role (Epstein-Barr Virus) plays in MS pathogenesis, however we anticipate stopping the study as no treatment benefit was observed.”
Touchon said this meant significantly reducing expenses associated with the development of the drug, though he stopped short of saying the company would completely abandon it. Instead, Touchon said, the company would redouble its efforts with other drugs in its pipeline.
Atara last month had some positive news to report on one of those drugs, known as ATA 3431 to treat B-cell malignancies (B cells produce antibodies that then attack invading viruses and bacteria). The drug showed positive laboratory results in a preclinical trial, inhibiting tumor growth significantly more than the placebo.
Atara said that, given these results, it hopes to start clinical trials on this drug next year.
Expanded partnership
In another development, on Dec. 20, Atara announced it had closed a deal to expand an already existing partnership with Paris-based pharmaceutical giant Pierre Fabre to bring to market in the United States and several other countries the drug tabelecleucel, or tab-cel for short. This drug, developed by Atara, aims to treat a rare and aggressive form of hematologic cancer. The two companies had previously teamed up to commercialize tab-cel in Europe.
With the closing of the transaction, Atara will receive $27 million in cash upfront, and the company has the potential to receive up to $640 million in royalty payouts and payments contingent on achieving certain regulatory and marketing milestones.
“This deal structure meaningfully reduces our cash burn over the next two years and provides Atara and shareholders with significant value, both through short-term cash and potential milestone payments and long-term significant double-digit royalties,” Touchon said.
Simultaneous with that announcement came the layoff notice – the second round of layoffs in less than 18 months. In August of 2022, Atara announced it would lay off 20% of its staff at the time.
The company characterized this latest round of layoffs as part of its strategic plan to stretch out its “cash runway” through most of 2025.
Finally, last week, Atara announced that affiliates associated with an existing investor would buy about 27 million shares of stock at 57 cents per share in a deal valued at about $15 million. The company did not identify the investor.
Atara shares rose about 25% on this news, though that translated into a boost of only 11 cents, to 55 cents a share.
The company will need more such positive news events to push its share price above $1 and avoid delisting from the Nasdaq exchange.
Eat: Applebee’s is part of the Pasadena-based Dine Brands empire.
The state of the franchising industry going forwardis in flux.
That is the belief of Barry Kurtz, an attorney with Lewitt Hackman in Encino. As the chair of the firm’s franchise practice group, he would know, because he represents franchisers and franchisees in national and regional restaurant, retail and service businesses.
Franchising is an approach to entrepreneurship for a large number of Americans, with many women and people of color opting into the practice. According to International Franchise Association research, the minority franchise ownership rate is 26%, compared to 17% of independent businesses generally.
According to the Business Journal’s annual list of largest franchisers in the greater San Fernando Valley area, Dine Brands Inc., the Pasadena-based owner of the IHOP and Applebee’s brands, is the No. 1 franchise with 3,500 locations, all owned by franchisees. The next two on the list are nonfood brands – Sherman Oaks-based My Gym Enterprises at No. 2.and retailer Carmen Steffens in Westlake Village at No. 3. Rounding out the top 10 are six other food concepts, including three pizza restaurants; the remaining franchise is a nonfood business – 911 Restoration Franchise Inc. in Van Nuys, which sits at No. 5.
Barry Kurtz
Minimum-wage hike coming
When asked what the future holds for franchising in California, Kurtz answered, “It is up in the air.”
And a minimum-wage hike coming in the spring makes that future even more uncertain.
“We are going to have to wait and see what the increased wages on minimum wage does,” Kurtz said.
The increase to $20 an hour for employees of fast food restaurants is going to have a big impact on the franchises affected by it. The wage increase affects fast food chains with 60 or more locations nationwide. That’s $4 more than the current minimum wage in the state – an increase of 25% in one of the largest expense categories for restaurants.
There is one winner and two losers coming from the rise in the minimum wage, Kurtz said.
“The employees are coming out good because their minimum wage is going up from $16 an hour to $20 an hour,” Kurtz said.
On the other hand, he added, he saw recently that two Pizza Hut franchisees in Southern California were going to lay off 1,100 delivery drivers, possibly due to the wage increase.
“So it’s not good for that 1,100 who are losing their jobs,” Kurtz said.
In Worker Adjustment and Retraining Notifications filed with the state Employment Development Department, the two Pizza Hut franchisees – Southern California Pizza Company LLC in Orange and affiliates of PacPizza in San Ramon – said they had “made a business decision to eliminate first-party delivery services and as a result the elimination of all delivery driver positions.”
The affected restaurants include those in Los Angeles, Riverside, San Bernardino and Kern counties. The layoffs range in number from one in Coachella up to 12 in Hollywood and Sylmar and 13 in Victorville.
And lastly, the consumer is going to pay the increased costs that are going to be put on the franchisees at their restaurants, Kurtz said.
Peter Lagarias,an attorney with Lagarias, Napell & Dillon LLP in San Rafael, represents franchisees in his practice. He said the ones he spoke to were not in favor of the wage increase.
“I can tell you that franchisees did not support AB 1228 because labor is one of their big-ticket expenses,” Lagarias said. “They already have higher costs in food, higher cost of rent, and this will increase their labor costs. And if they raise the price of their product to consumers they have to pay more in royalties to their franchisers. Most franchisers require a franchisee to pay a percentage of, say, 5% to 6% of their total revenue as a royalty.”
Related bill
The increase in the minimum wage for fast food workers was the result of a compromise reached between Gov. Gavin Newsom’s office, industry trade groups and several large franchisers. The compromise bill, AB 1228, was signed into law by Newsom on Sept. 28.
In addition to the wage increase, the bill also created a Fast Food Council. The council is established within the Department of Industrial Relations with equal representation of employers and employees, as well as a neutral chairperson. The council’s main job is to set wages in the future.
The law states that the council can only make recommendations to the Department of Industrial Relations and other state agencies. After April’s minimum-wage increase, the council can only raise worker wages by 3.5% a year or the consumer price index, whichever is lower.
The compromise bill reached between Newsom’s office and the fast-food franchisers very much favors the employees, Kurtz said, adding, “You have a council that is tipped in favor the employees.
“There is nothing wrong with that, but the franchisers are going to be the subject of any negative actions the council takes. Whether that is wages or injuries in the workplace, anything that can come up, they will have to get along in a different way,” he said. “A franchiser will sit back and say, ‘Why are we doing this franchising? If we are responsible for the employees, we’ll just operate (the locations) ourselves.’”
But if the council is tipped in favor of the franchisees, then the franchisers have an advantage of their own when it comes to other aspects of the industry.
Lagarias, the attorney who represents franchisees, said that the franchise agreements invariably favor the franchiser.
“Franchise agreements are adhesion contracts written by and for franchisers,” Lagarias said.
Opportunities to own
For Kurtz, who has heard time and again about immigrants coming to the United States who end up owning 100 chicken restaurants or some such, franchising represents an opportunity.
“It gives people the opportunity to get into the business that’s being franchised,” he said. “They get trained, they get continuing support and, depending on the size of the franchiser, they get advertising they couldn’t otherwise afford.”
But there are disadvantages as well.
“If you are an independent person you probably don’t want anyone telling you how to cook your hamburgers,” Kurtz continued.
When franchising works, it works really well, he said, adding that if the franchiser or franchisee doesn’t do what they are supposed to do, that is when issues arise.
“You are going to have lawsuits, you are going to have adversarial feelings between franchisers and the franchisees,” Kurtz said. “The franchiser only makes money if the franchisees make money, so everybody’s got to perform.”
Lagarias, who has known Kurtz for 25 years, called franchising an enormous part of the retail economy.
“This includes many of the hotel chains are franchised, most of the gas stations are franchised. Many fast food restaurants are franchised,” he added. “And it’s one industry after another. Many of the gym concepts, and there are dozens and dozens of different gym concepts, are all franchised.”
As a group, franchisees have an enormous number of employees working for them, he continued.
“My memory is that there are something approaching 9 million employees at franchise locations (nationally),” Lagarias said. “Think about that.”
Jason Cochran
Jason Cochran, the chief executive of American West Restaurant Group, the largest Pizza Hut franchisee in California and the third largest in the United States, said he was attracted to the brand because of the fond memories he had of going with his parents and brother to their neighborhood Pizza Hut location in Glendale, Arizona.
“I have always had a connection with Pizza Hut and relate it to family and fun food,” Cochran said in an interview on the Pizza Hut website. “Having an opportunity to lead the third-largest Pizza Hut franchisee is a fulfilling way to enable a legacy of memories for thousands of store team members and millions of customers.”
Nick Sallem, a licensee of Pizza Hut locations in Florida, said that the brand had enabled him and his business partner to provide more employment opportunities in their community.
“We’re looking forward to opening up many more locations in the near future,” Sallem said on the Pizza Hut website. “I’m sure this partnership will continue to grow.”
Kurtz said that what franchisers look for in a franchisee is an individual with the ambition and personality to do what has to be done in order to make the franchise successful.
“They want to see that they have a good demeanor and the ability to oversee employees and operations,” he added.
A franchiser looks for myriad things in a franchisee, but it basically comes down to, are they a good person and can they be a partner with them in the business, and do they have the ambition, but not too much to do what they are told, Kurtz said.
“We are telling you what to do not to discipline you, but rather to help you succeed,” he said.
As for advice to incoming franchisees, Kurtz said they should check with current franchise owners of the business they are looking to get into, because those owners know what is happening on the ground.
And if they hear negatives from a lot of the franchisees, then maybe there are issues in the system that the potential buyer doesn’t want to take on, Kurtz said.
He also recommends reading the franchise contract or agreement, adding that some people sign 60-page contracts without having read them or having an adviser, such as attorney, go over it.
“Know what your responsibilities are going to be, because this is not a situation where you walk in on a Saturday, take the cash and go home,” Kurtz said. “You are going to be working seven days a week, especially in the restaurant industry.”
Even with all the negatives, franchising is here to stay, but it needs statutory protections, Lagarias said.
“It is the franchisees who are putting up all the capital, running the franchise businesses, and are paying the employees,” he added.
“When you talk to most franchisees, they are all-in,” Lagarias continued. “They have a huge investment in their franchise business. If they are terminated willy nilly they are losing everything. If they aren’t allowed to renew, or they are trying to transfer it and the franchiser doesn’t allow it, they have also lost everything.”
Rendering: Marjory Stoneman Douglas Visitor Center in Everglades National Park in Florida, a Tutor Perini project.
Although the stock markets overall enjoyed a banner year in 2023 – the S&P 500 was up 24% – Valley-area stocks, with a few notable exceptions, had a far more modest year.
While the S&P 500 saw its large gain, a handful of companies carried much of that weight; L.A.-area companies, similarly, varied widely short of its all-stars. Some of those performers hail from the Valley and its neighbors.
Consistent with other tech firms, Glendale-based LegalZoom.com was among the top gainers in the county, with share prices up 46% at the end of 2023.
Biotech climbing
After a generally low-performing year, biotech began a comeback late in the year, with some companies erasing losses and gaining in price by the end.
Amgen Inc., the Thousand Oaks-based biopharmaceutical company, ended the year up more than 13%, largely on the heels of its acquisition of Horizon Therapeutics in September for $28 billion. Simulations Plus Inc., a biotech software firm in Lancaster, also had a good year, with prices up 23%.
Study: A technician in Amgen’s Thousand Oaks headquarters conducts research.
Meanwhile, Westlake Village biopharmaceutical MannKind Corp. (down 31%), Thousand Oaks-based Atara Biotherapeutics Inc. (down 84%), Arcutis Biotherapeutics Inc. in Westlake Village (down 79%) and Pasadena-based Arrowhead Pharmaceuticals Inc. (down 25%) did not quite capitalize on the turnaround, but better days may lie ahead.
“Biotech, specifically the small- and mid-cap firms, had a pretty awful year up through October,” said Sahak Manuelian, managing director and head of equity trading for downtown-based Wedbush Securities. “We’ve seen a big surge in biotech for the last six weeks or so, so we’ve seen some perform better. Arrowhead benefited from that in December, although it had a pretty lackluster year, along with most of that group for the last 24 months quite frankly.”
Disney ekes gain
In a year full of public relations battles, Burbank’s stalwart Walt Disney Co. saw a 4.3% gain on the year – certainly not the loss its detractors have wished for.
“Nonetheless, an extreme laggard compared to what some of the other names in this space have done,” Manuelian said. “Bob Iger came back, and he’s had a tough task. I think he’s got to chop this up and make some sales of portions that are less profitable than others.”
On top of the familiar intellectual property, Disney’s brand has bloated over the past decade or so to include Marvel and 20th Century Studios. Additionally, the company also controls ESPN and Hulu, the latter of which it upped its stake in last year. Share prices have struggled periodically, which has prompted shareholder and activist investor Nelson Peltz into not one but two proxy challenges to land a seat on Disney’s board.
Tech a winner
Broadly, valuation gains for tech companies carried the bulk of stock market growth; gains by the so-called “Magnificent Seven” – Apple, Alphabet, Meta, Microsoft, Amazon, Nvidia and Tesla – were responsible for most of the S&P 500’s performance.
LegalZoom’s gains had it finish the year at $11.30 a share. Elsewhere in the county, Snap Inc. in Santa Monica was up 89% on the year, while Microsoft saw a significant gain after its $69 billion purchase of Activision Blizzard, also in Santa Monica.
“We saw a lot of resurgence among the tech world and I think Snap certainly benefited from that,” Manuelian said. “Snap I think falls into this trend where we saw a lot of these tech stocks that got so beaten up in 2022 really come back (last) year.”
Still, it was no guarantee of success in the tech world – Calabasas-based NetSol Technologies Inc., an automobile leasing software firm, was down 24%.
Semiconductors also win
Van Nuys-based semiconductor firm Trio-Tech International rode the wave of success in the industry last year, finishing out the year at $5.07 a share after rising by nearly 13%.
“Semis were up across the board last year,” Manuelian said. “They were a big winner last year, a lot of that on the chip bill introduced by the Biden administration.”
Office: Semtech Corp. maintains its headquarters in Camarillo.
However, it was “quite the opposite” for Semtech Corp. in Camarillo, which saw its price fall by nearly 24% last year.
Other observations
Glendale-based Public Storage rescued its share price with its acquisition of Simply Self Storage. After the $2.2 billion purchase closed in October, prices climbed from their lowest point of the year and closed out at $305, nearly 14% up from the start of the year.
Construction was another success story last year, likely driven by growing political support for housing and infrastructure projects. Tutor Perini Corp., based in Sylmar, saw its price grow by nearly 21% last year.
“Inventory is really the whole storyline here,” said Rick Barragan, a market manager for the J.P. Morgan private bank in Los Angeles. “There’s so little inventory out there, so I think construction and building will continue.”
Moving forward
For this year, analysts are hoping that tailwinds formed near the end of last year will continue and further ease lingering concerns about the state of the U.S. economy. These follow a first half of the year that saw continuing inflation, which resulted in multiple interest rate hikes by the Federal Reserve. With cooling inflation and rates unchanged since June, that picture began to improve in the second half of 2023.
“For 2023, obviously with all of the Fed hikes, everybody was really caught off guard and we had a lot of clients who were lucky to be in (Treasury bills) and gain 5% on the year,” Barragan said.
“Going forward for 2024,” he continued, “I think there’s three key things that we’re really looking at that will help the market broadly. We certainly think inflation is fading. The consensus is that the Fed is going to start to cut rates. If we continue to have strong earnings and growth at the corporate levels, that’s another strong tailwind.”
Ram Katalan, the chief executive and co-founder of NorthStar Moving Co., said that the company has a mission to put service back into what should have been the ultimate service industry: the moving industry.
NorthStar currently has one franchisee, in San Leandro in Northern California, but Katalan said the company is waiting on the “perfect fit” for a business partner and may add another franchisee this year.
Katalan added that running a moving company is a hands-on business that cannot be operated remotely.
“It will require 100% of your attention,” he said.
Please give us an overview of your franchise operation.
Founded in 1994, Los Angeles-based NorthStar Moving Co. has redefined the moving industry as the first to offer eco-luxury moving services, elevating basic moving and storage services to a new level of customer service, customized care and environmental consciousness. Woman-owned, NorthStar Moving has earned more awards for service than any other moving company: “A+” rated by the Better Business Bureau, consistently earns five-star reviews on Yelp and Google and recipient of dozens of awards for corporate culture, green practices, community outreach and growth including 10 Best Places to Work awards and ranked on the Inc. 5,000 list of fastest-growing private companies for seven consecutive years. The company’s local, long-distance and international moving, storage services and eco-luxury packages have been featured in leading magazines including “The Robb Report Collection” and on multiple home and design television shows. NorthStar Moving has proven the state-of-the-art way to move is with its red carpet service, recommended by Coldwell Banker Concierge, MovingInsurance.com and an impressive list of celebrity clientele. NorthStar Moving’s mission is to exceed their clients’ expectations with customer care and to move service back into what should have always been the ultimate service industry: the moving industry.
How many franchisees do you have now, and how many do you plan to have by the end of 2024?
We currently have one franchisee and three company-owned locations. We are waiting for the perfect fit. So, maybe one more this year.
What are the financial requirements for potential franchisees?
The total investment necessary to begin operation of a NorthStar Moving Company franchise is from $114,500 to $215,000. This includes $50,000 that must be paid to the franchisor or its affiliate.
What do you think are the advantages of owning a franchise?
It’s a proven method to having a successful business. The advantage is working with a trusted brand and the leadership of 30-plus years in the business.
And the flip side: Any disadvantages?
If you don’t like following a template, it’s not for you. You don’t get to go out and paint the trucks pink, for instance. We have a strong brand identity, and we stick to it.
What do you emphasize to prospective franchisees about the business they are about to enter?
It’s a service business. If you are not focused on making folks happy, NorthStar Moving is not for you.
When you are seeking new franchisees, what qualities do you look for, other than the financial thresholds they must meet?
We look for individuals who care about details, service and making people happy. We also look for a good leader, people who want to seize the day, who love to follow systems that work and are proven, are skilled at multitasking and love working in a fast-paced environment.
What advice would you give incoming franchisees?
The advice I would provide an incoming franchisee is to take advantage of all of our one-on-one training. Learn every aspect of the business and ask lots of questions. This is hands-on business. You won’t be operating your business remotely. It will require 100% of your attention.
Metro is Minimizing Construction Effects
Regarding the article “New East Valley Metro Plan Unleashes Unease” in the Jan. 1 issue of the Business Journal, I want to correct misinformation in the story and personally address how Metro is working to be a good neighbor and support local businesses. The East San Fernando Valley Light Rail is the backbone of a network of improvements that Metro is delivering to greatly improve mobility and foster economic vitality in the area.
Still, construction projects can cause significant impacts to businesses and the community, and we understand why community members might be concerned. That’s why we are applying lessons learned from other projects and implementing aggressive and proven strategies to ensure that San Fernando Valley communities thrive during the construction period and come out on the other side more connected.
Some of the ways we are supporting businesses impacted by construction include:
• Business Interruption Fund of up to $60,000 annually per qualifying business to offset revenue loss during progressive and heavy construction. This fund started in 2015 as a pilot program and, based on its success in supporting businesses along the K Line, as well as the Regional Connector project, where more than 94% of businesses, remained in operation post-grant award. In fact, for the K Line, 74% of small businesses that received a BIF grant were still in operation when the Line opened in 2022 after eight years of construction and a pandemic. As a result, the Metro board expanded it to include the East San Fernando Valley project as well. To date, it has awarded just under $40 million, and measures of its effectiveness can be seen at businesses along the K line, Purple Line extensions and the Regional Connector stations.
• Business Solution Center partners with local community-based organizations to provide business-support services, such as website development/enhancements, business planning, legal services, accounting assistance and help with internal operations to small businesses impacted during construction.
• Loss of Goodwill and Relocation Funds of up to approximately $37 million to persons and businesses displaced by the project so they can continue to thrive. Metro will guide displaced businesses through the relocation process and explain how to claim relocation and loss of goodwill funding.
• Eat, Shop, Play supports local businesses with marketing and/or resources to mitigate construction impacts. This is a no-cost program, and businesses may apply at metro.net/eat-shop-play. Metro works with individual businesses by reviewing their operations and developing a plan for how best to help them maintain awareness of their businesses and the services they provide. Some of this support may include helping them refine business practices and/or helping them with advertising, social media training and other marketing-related business services or skills.
We’re committing to building strong relationships with those who live and work in the San Fernando Valley. Some of the ways we are doing this are:
• Activating our Community Leadership Council, an advisory group comprised of community leaders who will advise on and support outreach and engagement efforts throughout the construction of the project. The members of the Community Leadership Council were selected after a multimonth application/interview process. And those selected to join the CLC represent an array of active community leaders from community-based organizations (such as Holos Communities, Valley Economic Alliance, Neighborhood Legal Services, MEND and others), small-business representatives, area residents and members of the area neighborhood councils.
• Hosting Community Meetings in multiple languages throughout the construction period led by the dedicated Construction Relations Team. Meetings are conducted both virtually and in-person, with in-person meetings featuring an accompanying open-house segment.
• Demonstrating Cultural Competency, a first-of-its-kind Metro mandate to ensure consideration of race, ethnicity, gender, immigration status, languages spoken, socioeconomics and public transportation dependency. In working with San Fernando Transit Contractors, this joint-venture team has identified at least 20 CBOs to engage as part of the preconstruction design-build process, with a particular focus on Spanish-language outreach.
Metro is committed to being a trusted community partner. We are proud that we are bringing a historic level of investment of $3.5 billion into this community, while also implementing a robust local-hire program, which prioritizes hiring residents from the community.
And we are excited about what’s to come with the new 6.7-mile light-rail line that will connect the communities of Van Nuys, Panorama City, Arleta and Pacoima along Van Nuys Boulevard, one of the Valley’s busiest corridors.
In addition to the light rail, we’re bringing speed and safety improvements to our main bus line, adding bus priority lanes to Roscoe, partnering with the city of Los Angeles on transit signal priority and shade structures, and increasing the frequency of North Valley buses to 10 minutes or better by 2025.
We look forward to seeing you in the community. Our next construction update meeting is online on Feb. 29 at 6 p.m. (https://bit.ly/esfvmtg). For more information about the East San Fernando Valley Light Rail Transit Project, and other Metro programs, please visit www.metro.net/projects/east-sfv/
Thank you for the opportunity to elaborate on our efforts to be a good neighbor and partner. I look forward to supporting the local community as this project gets underway.
Stephanie Wiggins is chief executive of the Los Angeles County Metropolitan Transportation Authority.