Miami, FL commercial litigation attorney Robert Zarco talks about whether you should sell your business to a Private Equity Fund. He observes that franchisees rarely have opportunities to sell individual businesses to private equity groups. These groups typically seek larger-scale investments with substantial net income, which allows them to apply valuation multiples and determine an appropriate purchase price. While multi-unit franchise operations may occasionally attract private equity interest, such investors more commonly pursue ownership stakes in the franchisor—the entity that controls the brand.

He notes that private equity introduces a distinct dynamic into the franchise relationship, with potential benefits or drawbacks. The impact largely depends on the private equity group’s objectives, which are generally financial rather than operational or industry-specific. Decisions made by these investors may prioritize financial returns over the long-term interests of individual franchisees or the franchise concept itself, creating potential uncertainty, complexity, and risk within the franchisor-franchisee relationship.