When people think of franchising, they often think of restaurants. However, the franchise industry extends far beyond food service, encompassing sectors such as automotive and heavy equipment dealerships, beverage distribution, home services, and a variety of other multi-unit retail concepts. Franchising plays a crucial role in these industries, providing a structured model that fosters scalability, brand consistency, and operational efficiency.
At Franchise Equity Partners, we believe the franchise model is the ideal solution for scaling multi-unit retail businesses. Over the past two decades, branded concepts have steadily displaced independent operators, capturing greater market share and reinforcing the value of strong, recognizable brands. Franchising offers a framework that allows brands to expand more efficiently while maintaining brand continuity and ensuring that operators have a vested interest in their success.
Our investment approach focuses on franchise brands that demonstrate momentum and sound economics. We target growing brands with proven success across multiple geographies, with significant whitespace and sustained same store sales growth. In today’s real estate market, brands that generate at least a 25 percent unlevered return on new development remain a priority. Achieving these returns requires efficient unit economics, a scalable footprint, and a business model that controls costs while maximizing revenue streams.
The franchise industry faced a challenging landscape in 2024, marked by sluggish same-store sales, inflation-driven price increases, and constrained consumer spending. Elevated interest rates further complicated financing, slowing expansion. However, early indicators in 2025 suggest a potential recovery, offering a cautiously optimistic outlook in an unpredictable economic and political climate.
Restaurants: The Evolution of Private Equity Investments
Consumer spending on food away from home has increased from approximately 50 percent in 2015 to over 55 percent in 2024. This trend underscores the increasing dominance of restaurants, particularly quick-service concepts, in consumer spending patterns.
Private equity has become an essential growth driver for franchise brands, particularly in the restaurant space. The sector has become increasingly competitive over the last 20 years with more and more new brands entering the space. Franchisors are focused on market share capture through rapid expansion and as a result are increasingly reliant on private capital to fund expansion.
Growth in the QSR space has been driven by emerging brands stealing market share from legacy brands—with McDonald’s being a notable exception. For example, Starbucks has lost ground to Dutch Bros and 7 Brew over the past three years, reflecting evolving consumer preferences.
Instead of investing in costly freestanding locations, the focus is shifting toward inline concepts or delivery-first models that maximize efficiency and returns. For example, Jersey Mike’s has thrived by leveraging inline locations that maintain strong sales while avoiding high real estate and development costs. Wingstop has successfully implemented a delivery-first strategy, optimizing its footprint for lower costs and better financial returns. Meanwhile, newer entrants like 7 Brew, Dutch Bros, and Scooter’s Coffee have gained traction with double drive-thru and modular builds that reduce costs and accelerate expansion.
Beyond unit economics, resilient restaurant brands tend to succeed by maintaining price discipline amid inflationary pressures. While many brands raised prices by 25 percent or more in recent years, Wingstop limited its increases to just 3-4 percent, helping it sustain strong customer loyalty. There’s a clear correlation between brands that avoid aggressive price hikes and those that resonate best with consumers.
Home Services: A High-Demand Sector for Franchise Growth
Private equity firms are increasingly targeting the home services sector, where demand for essential services—home maintenance, repair, and renovation—remains strong. Unlike discretionary spending categories, home services benefit from consistent consumer demand, particularly in uncertain economic conditions.
Franchise models in this sector appeal to investors due to their recurring revenue, low overhead, and strong customer retention. Scalable operations, lean staffing models, and technology-driven efficiencies are making these businesses attractive acquisition targets. From HVAC and plumbing services to residential cleaning and pest control, home services brands that emphasize operational efficiencies and strong customer acquisition strategies are securing private equity funding. Multi-unit operators with proven track records in optimizing service delivery and maximizing territory growth are particularly appealing.
A key driver of growth in home services is the disintermediation of mom-and-pop operators, which has created opportunities for well-branded, scalable franchise concepts. Over the past decade, many independent operators have lost market share, making room for more structured, technology-enabled brands to expand. For instance, garage door repair services remain essential—if a homeowner’s garage door fails, they need an immediate solution to get to work. This kind of non-discretionary, essential service reinforces the sector’s resilience, even during economic downturns.
The Generational Wealth Transfer and Franchise Equity Partners’ Role in Investment
Industries undergoing mass consolidation present both challenges and opportunities for multi-generational family businesses. Many of these businesses must decide whether to acquire or be acquired, but families often lack the capital necessary to participate in large-scale consolidation without a capital partner.
Franchise Equity Partners helps businesses fund or expedite growth. For franchisors, this may mean committing to and funding large development agreements while investing in above-store management and infrastructure to support rapid expansion. For franchisees, this can involve financing large-scale new development, capital projects, or acquisitions of other large operators.
Many family-owned businesses also face complexities associated with intergenerational wealth transfer. Due to multi-generational ownership structures, a significant number of disinterested shareholders can create operational challenges. FEP provides liquidity solutions to help companies transition to their next phase, allowing existing owners to cash out disinterested shareholders or diversify their holdings by taking a minority stake.
The franchise industry continues to evolve, and brands that can adapt to shifting consumer preferences, optimize unit economics, and leverage private equity effectively will be best positioned for success. With a focus on high-growth sectors like emerging restaurant brands and home services, Franchise Equity Partners remains committed to identifying and supporting the next generation of franchise leaders.
By Mike Esposito, Co-Managing Partner of Franchise Equity Partners