Private equity acquisitions of franchisors and large franchisees is a phenomenon that has transformed the franchising landscape over the past two decades.
Berkshire Hathaway owns Dairy Queen, which it acquired in 1998. Goldman Sachs Capital Partners owns a significant interest in Applebee’s largest franchisee, Apple American Group LLC, operator of 270 Applebee’s restaurants. Trian Partners L.P. owns a controlling stake in Wendy’s. Roark Capital now owns the Arby’s, Seattle’s Best, Schlotzky’s, Auntie Anne’s Pretzels, Cinnabon, WingStop and Money Mailer franchise networks (among its portfolio of 23 franchise networks). TZP Group a few years ago acquired The Dwyer Group. Three private equity firms (Thomas H. Lee Partners, Bain Capital and the Carlyle Group) own Dunkin Donuts. And in the largest acquisition of a franchisor ever, a fund of the Blackstone Group acquired Hilton Worldwide Inc. for approximately $25 billion in 2007. (The author’s firm served as franchise counsel in the Hilton transaction and in Trian’s acquisition of a controlling interest in Wendy’s, and serves as franchise counsel to Arby’s.)
