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Two franchisees in a conference room discussing questions to ask before a PE partnership.

6 questions franchisees should ask before embarking on a PE partnership

March 14, 2024 / 5 min read

In Franchising Magazine USA, Partner Lisa Plonka offers valuable insights into the considerations franchisees should make before entering a private equity partnership.

Private equity (PE) firms are increasingly investing in franchise brands. While that fact is no secret, the idea of partnering with PE investors can lead to many questions. The right PE partnerships can serve as an accelerant. The challenge, of course, is figuring out what the “right” PE partnership looks like.

This exercise should start with strategy and knowledge of the marketplace. It’s important to thoughtfully prepare for any potential transaction, which requires an analysis of your current and future state of operations. It’s even more critical now because although PE firms are still actively investing in franchises, the speed with which these deals are finalized has slowed.

In today’s transaction environment, many PE firms are taking a cautious attitude, asking more questions, and digging deeper into metrics than before to ensure an investment is based on accurate data and forecasts. This shouldn’t deter a franchisee from considering a transaction, but it heightens the need to be prepared.

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