Funds That Acquire and Operate Franchises
Fund formation for multi-unit franchise operators and investors
Scale, with outside capital
Franchising rewards scale: a group that operates twenty units negotiates better terms, runs leaner and sells for a higher multiple than twenty single-unit owners. A fund is one way to reach that scale with outside capital. It also sits between two sets of rules, the securities laws that govern the fund and the franchise agreements that govern each unit, and the two have to be reconciled before the first investor signs.
We form franchise funds and work through the franchisor's transfer, approval and ownership requirements so the fund can actually hold the units.
What is a franchise fund?
A franchise fund is a private fund that raises capital to acquire, develop and operate franchised locations, usually under one or a few brands in a defined territory. The fund or its subsidiaries sign the franchise and development agreements, hire the operators and hold the real estate or leases. Returns come from unit cash flow and from selling the portfolio to a larger operator or the franchisor. Because most franchise agreements restrict transfers and require franchisor approval of owners, the fund's structure has to satisfy the franchisor as well as the investors.
What we do
• Form the fund and the entities that will hold each unit
• Draft offering documents that describe the brand, the territory, the operating plan and the risks
• Review franchise disclosure documents and negotiate development and franchise agreements
• Handle franchisor approvals, transfers and the eventual sale of the portfolio
Building a franchise portfolio?
Tell us about the brand, the territory and your investors, and we'll propose a structure and a flat fee. Or call +1 (202) 556-4455.