Lessons from the Dragons' Den: Divorce, then marriage

Written by Rick Spence

Tune in, read on, lift off

Capital connections

What Dragons want

Here be dragons: Jim Treliving |  
Kevin O’Leary

Laurence Lewin

Jennifer Wood
Robert Herjavec

Meet the multimillionaire entrepreneurs who rule the Den — and know a good business when they see one

Jim Treliving
Chairman, Boston Pizza, Richmond, B.C.

Best advice: Know your market. “There are no angels saying, ‘I want to invest in a small business for an 8% return'”

Jovial Jim Treliving, the former Mountie who now oversees Boston Pizza’s U.S. expansion from Dallas, seemed to enjoy playing the “good cop” on Dragon’s Den. Time and again, while the other Dragons jumped all over the entrepreneurs and poked holes in their stories, Treliving held his fire. When it was time to declare whether he was “in” or “out” of the deal, he usually offered encouraging words and wished the entrepreneurs luck. His avuncular manner made the rejection easier to take.

With partner George Melville, Treliving has built Canada’s leading casual-restaurant chain the same way: by emphasizing goodwill. But Treliving sees his franchisees — the hands-on people who are actually building the 260-store chain every day — as his key customers. So, unlike some franchisors that maintain a love-hate relationship with their operators, Richmond, B.C.-based Boston Pizza focuses on providing the training, financing and operational support that its franchisees need to keep their businesses growing.

Treliving was working for the RCMP in British Columbia when he discovered Boston Pizza, which had been founded in Edmonton in 1964. Seeing the fun, frugal eatery become a success across Western Canada, he quit the force in 1968 to open a franchise in Penticton, B.C. There he met Melville, a local accountant, and together they built a string of 17 franchised restaurants before they made a bid for the whole business in 1983.

That’s when Treliving demonstrated the “stuff” of which Dragons are made. He and Melville pulled off a deal they’d never tolerate from any wannabe tycoons seeking to deal with them today. Stretched for cash, they financed their $3.8-million purchase of the 44-store chain without putting up a cent of their own. Half the funds came from outside investors, while the seller lent them the rest.

As Boston Pizza grew, many entrepreneurs came to Melville and Treliving for funds. So they set up T&M Group to look at deals and conduct due diligence. Most recently they bought Mr. Lube, the 94-store chain that pioneered the drive-through oil change in Canada. Like many angel investors, Treliving and Melville bought into a business similar to their own — a franchisor that believes in helping its franchisees succeed. “You try not to do business with someone whose thought process is completely different from your own,” says Treliving.

The duo have invested in dozens of other businesses, such as strip plazas, oil and gas, and sports, including Phoenix-based Global Entertainment Corp., a publicly traded operator of minor-league hockey teams and small-town arenas.

What’s the attraction? “It’s the deals,” says Treliving. “It’s a lot of fun.”

T&M looks at two or three opportunities a month, but passes on 14 out of 15. Melville and Treliving also expect to buy 50% of a business and to control decision-making. These demands are made up front, so there are no misunderstandings later. “You almost do the divorce before the marriage,” says Treliving. “You have to make sure everyone knows where everyone stands.”

Moreover, Treliving looks for an annual return of 18% or more. He doesn’t believe in the venture-capital mantra that only one or two companies out of 10 are going to make it big: “We look at the deal, and do our own due diligence. If it fits with our thinking, we expect every investment to succeed.”

Like his fellow Dragons, Treliving complains about the number of ill-prepared pitchers on the show. But as the unofficial “good cop,” he also says he was surprised at the quality of many of the ideas. He hopes that by watching the show — and absorbing the panel’s critiques — more entrepreneurs will understand what investors are looking for. So that maybe next year, if there is a second season, the presentations will get better and more deals will get done.

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