How Private Equity Can Impact Franchisee Growth

How Private Equity Can Impact Franchisee Growth 

Private equity (PE) has become an increasingly common presence in franchising—especially among multi-unit franchisees looking to grow faster, scale more efficiently, or take some chips off the table.

While PE is often talked about at the brand level, franchisees feel its impact directly through growth capital, recapitalizations, and acquisition opportunities. The key is understanding how PE works and how it fits alongside franchise financing.

“As franchisees grow, capital strategy becomes just as important as day-to-day operations,” says Travis Perrine, Director of Business Development at ApplePie Capital. “Private equity can support growth—but only when it’s aligned with the operator’s goals.”

Below is a straightforward look at how private equity shows up in franchising and what it can mean for franchisee growth.

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Private Equity 101: How PE Thinks About Franchise Businesses

At a high level, private equity is ownership capital invested with the goal of growing value over time—typically through expansion, operational improvement, and an eventual exit.

PE firms are often drawn to franchise businesses because they combine predictable cash flow with repeatable unit-level economics. Strong systems, consistent performance, and clear paths to scale tend to stand out.

Common PE Investment Structures

• Platform investments: Acquiring a controlling interest in a franchisor or large franchisee to serve as a foundation for future growth
• Minority investments: Providing growth capital while allowing existing owners to retain control
• Majority investments: PE firm becomes the primary owner, often alongside rollover equity from founders or operators

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Where Private Equity Shows Up in the Franchisee Growth Lifecycle

For franchisees, PE involvement usually begins once an operator reaches meaningful scale.

Common scenarios include multi-unit rollups, recapitalizations that provide partial liquidity, or growth partnerships that fund faster expansion.

“In many cases, PE isn’t about replacing the operator—it’s about backing them,” Perrine notes. “The strongest partnerships support experienced franchisees without over-leveraging the business.”

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What Private Equity Looks for in Franchisees and Multi-Unit Operators

While every firm is different, PE investors generally look for franchisees with:

• Consistent unit-level performance and healthy margins
• Durable, predictable cash flow
• Strong management teams and reporting systems
• Clear white-space for expansion

Inconsistent performance, weak controls, or limited scalability can slow—or stop—interest.

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What Private Equity Means for Franchise Financing

PE capital is equity, not debt—and it’s often paired with traditional franchise financing.

Most PE-backed franchisees still rely on loans to fund new units, while equity supports infrastructure, acquisitions, or liquidity events.

From a lender’s perspective, PE can be a positive signal when it strengthens the overall business and supports sustainable growth. That said, fundamentals still matter: cash flow, unit economics, and execution remain key.

Before partnering with PE, franchisees should understand how decision-making, reporting, and exit expectations may change.

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Real-World Scenarios: How PE Can Drive Growth

While every deal is unique, several common patterns emerge in franchising.

• Emerging brand: PE funds infrastructure and franchise development to scale nationally
• Mature brand: PE supports acquisitions, international growth, or brand diversification
• Multi-unit operator: PE provides capital to consolidate locations and expand rapidly

Across these scenarios, the most successful outcomes occur when capital, operations, and financing strategies are aligned from the start.

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Final Thoughts on Private Equity and Franchise Financing

For franchisees, private equity can be a helpful growth tool—but it’s not a requirement for success. The best outcomes happen when operators pair strong fundamentals with the right mix of equity and franchise financing.

“Franchisees don’t have to choose between growth and control,” says Perrine. “With the right structure, it’s possible to scale responsibly and protect long-term value.”

Whether you’re actively exploring PE or simply planning your next phase of growth, understanding how private equity fits into franchise financing can help you make more confident decisions.

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