Miami, FL commercial litigation attorney Robert Zarco talks about whether you should sell your business to a Private Equity Fund. Franchisees generally encounter limited opportunities to sell their individual businesses to private equity groups. Private equity entities typically focus on larger investments with substantial net income, allowing them to apply appropriate valuation multiples. While private equity may express interest in large multi-unit franchises, their more common involvement lies in acquiring the franchisor’s interest—the entity owning the brand.

The introduction of private equity brings a distinctive element to the franchise relationship, potentially yielding positive or negative impacts. The ultimate outcome hinges on the true intentions of the private equity group, primarily operating in the financial realm rather than the specific industry of investment. Decisions made by private equity entities may prioritize financial returns, potentially conflicting with the best interests of franchisees or the underlying business concept. This conflict introduces elements of uncertainty, complexity, and risks into the franchisor-franchisee dynamic.