by Steven Beagelman

Unlocking the potential of your franchise brand through strategic private equity investments.

Entrepreneurs have created amazing franchise companies over the years with proven business models where they have built, expanded, and grown their brands. When bringing on franchisees, the businesses are able to operate in communities regionally, nationally, and even internationally.

With the success from these franchise systems, it has become very attractive for the private equity (PE) industry to get involved. Private equity has seen immense opportunities in franchising especially over the last several years.

Private equity firms usually provide an influx of capital needed to accelerate new and future growth. Today, we are seeing franchises of all stages and sizes being sought after by PE investors. There has been a significant uptick in both small boutique PE firms and larger PE firms getting into and expanding in the franchise industry through acquisitions of franchise brands.

The PE firms are developing new and creative ways to get a piece of the ever-expanding franchise industry. In the past, for a PE firm to invest in a franchise company most of them would require a controlling interest in the franchisor. This is still a majority of PE transactions today in the franchise industry. However, today more firms are willing to take a minority stake of a franchise brand just to be a part of the franchise business.