Executive Summary
Private equity firms are playing an increasingly significant role in the world of franchising. According to FRANdata, more than 12% of U.S. franchise brands now have some level of private equity ownership or investment backing, and firms like Roark Capital are investing billions into franchise systems throughout the country.
PE firms aren’t necessarily waiting for brands to reach a massive scale before investing either. Investors are increasingly entering earlier in a brand’s lifecycle, in some cases when a franchise system has only a handful of locations.
It’s clear to see why franchises are appealing to private equity firms: Franchise brands offer repeatable business models that make it easy to scale across locations. But PE firms look at more than just revenue growth or sales pipelines before making an investment. They’re evaluating whether that growth is supported by healthy unit-level economics, reliable financial performance, and positive franchisee experiences — and they expect brands to be able to provide this information easily.
For franchisors considering outside investment, PE readiness starts well before a deal is on the table. Here’s what brands need to consider if they’re interested in securing outside investment from PE firms.
Table of Contents
- When QuickBooks Works – but Consolidation Doesn’t
- What Is a Multi-Entity Organization?
- Can QuickBooks Online Consolidate Multiple Companies?
- Why Manual Consolidation Gets Harder as You Add Entities
- The Better Approach: Automate Multi-Entity Data Collection and Consolidation
- What Automated QuickBooks Online Consolidation Looks Like in Practice
- Beyond Consolidation: Turn QuickBooks Online Data Into Performance Intelligence
- When Should You Consider a Multi-Entity Solution Alongside QuickBooks Online?
- QuickBooks Online + Qvinci: Keep Your Accounting, Automate the Complexity
- Conclusion: Stop Building Consolidation from Scratch
- FAQ
Run the Business Like You're Always Preparing for a Sale
Private equity due diligence goes far beyond sales data. Before investing, PE firms need to understand how a business makes money, how locations perform, where opportunities exist, and whether the financial story shown in topline sales is supported by underlying data. This requires franchisors to provide visibility into detailed financial metrics at individual locations.
Disconnected spreadsheets, inconsistent reporting, and gaps in location-level data can make it difficult to demonstrate strong financial performance, affecting the level of confidence PE firms have in a brand. Before considering private equity investment, franchises need a strong business intelligence infrastructure that is based on near real-time reliable and standardized P&L data, as well as balance sheet, general ledger, operational, and other financial and non-financial location data.
Make data collection, consolidation, and mapping a breeze
Discover how Qvinci transforms franchise brands’ financial data into actionable insights everyone understands
Make the Unit-Level Economics Easy to Understand
Unit-level economics are considered the top metric private equity firms evaluate before an investment, followed by a franchise’s pipeline data1, because unit-level economics help investors understand how likely it is that a brand will be able to scale profitably. Evaluating revenue, COGS, labor costs, operating expenses, margins, and other financial and non-financial metrics gives potential investors visibility into the true health and growth potential of the brand.
Jon Canarick, managing director of private equity firm North Castle Partners, commented on this at the 2026 Fitness Finance & Growth Conference, as reported by Fitness Times. “Ultimately, bad franchisee P&Ls lead to the end of a franchisor. It ends very ugly, and it happens not that infrequently,” Canarick said. “So, we really want to know the success of the franchisees.”2
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1 Webinar, “Private Equity Readiness for Franchising – Quality of Earnings + Value Creation Levers,” International Franchise Organization, June 2026.
2 Liedke, Michael. “Private Equity Seeking Repeatable, Sustainable Fitness Brands for Financing,” Franchise Times. May 20, 2026.
The more visible and accessible this information is, the easier it becomes to prove that a brand’s growth is supported by healthy, repeatable unit-level economics, which starts with a strong infrastructure for location data.
Understand the Importance of Franchisee Satisfaction
In addition to business performance, PE firms will research franchisee sentiment. Investors will search online or even call operators directly to understand their experiences working with the brand. If operators don’t feel supported, no matter how strong the financial performance is, unfavorable franchisee sentiment can give PE a reason to pass on investing.
One of the biggest ways brands can foster a healthy relationship with their operators is by creating financial transparency. Providing peer benchmarking, KPI scorecards, and financial education can help operators not only understand where they stand relative to their peers, but also discover meaningful insights that can help them improve profitability. This creates a better experience for the franchisee, a healthier ecosystem for the franchisor, and a signal of confidence for PE firms.
Another metric investors may evaluate is the percentage of new locations opened by existing franchisees3. A strong rate of repeat investment can signal that franchisees see continued opportunity within the brand and have confidence in the economics of the model. But that confidence is built on more than financial performance alone — it also reflects the franchisee experience and the value they see in continuing to grow with the brand.
PE Readiness Starts with Running a Brand That’s Data-Rich
Private equity can provide franchise brands with capital and expertise to accelerate growth. But attracting investment requires more than record sales or a plan to invest in new locations. Investors are looking for evidence that the underlying business works and that success is repeatable — and they want to review the near real-time location data and KPIs that support that.
To stay ready for private equity investment, franchises must demonstrate consistent unit-level economics, reliable financial reporting, scalable data infrastructure, and franchisees that are succeeding and choosing to invest again. The brands best prepared for an investment conversation are often the ones that have already built these capabilities into the way they operate.
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3 Webinar, “Private Equity Readiness for Franchising – Quality of Earnings + Value Creation Levers,” International Franchise Organization, June 2026.
In the age of unit-level consolidation to PE firms and multi-unit owners, brands are going to win by effectively recruiting and courting franchisee ownership from these sources. If you can’t answer the question of how they’ll be profitable with your brand with good data to back that up, you’re already behind.
— Joe Barbano, CRO, Qvinci Software
- What are the typical operating costs?
- What are the margins?
- How much capital is required to open a location?
- How long does it take a location to reach profitability?
- What differentiates high-performing locations from underperforming ones?
- Can the business model support multiple locations?
- Does the financial performance justify the investment?
P&L and Location Data Can Help Your Item 19 Stand Out
Most brands choose to only show revenue in their Item 19 of the Franchise Disclosure Document (FDD). Less than one-third of franchises choose to include full P&L statements3, creating what could be a competitive advantage for brands with strong unit economics if they decide to include P&L and location data in their Item 19.
FAQ
1. What do private equity firms look for when investing in a franchise?
Private equity firms evaluate a franchise’s growth potential, unit-level economics, financial performance, and franchisee satisfaction before investing. They look for consistent profitability across locations, reliable financial reporting, and evidence that the business model can scale successfully. Strong location-level financial data helps franchisors demonstrate the health of their business and build investor confidence.
2. How can a franchise brand prepare for private equity investment?
Franchise brands can prepare for private equity investment by establishing reliable financial reporting, standardizing location-level data, and monitoring unit-level economics. Franchisors should be able to provide detailed P&L statements, balance sheet data, operating expenses, margins, and KPIs. Maintaining accurate, accessible financial data before a deal is on the table can help streamline due diligence and demonstrate investment readiness.
3. Why are unit-level economics important for private equity investment in franchises?
Unit-level economics help private equity firms determine whether a franchise can grow profitably and sustainably. By evaluating revenue, COGS, labor, operating expenses, and profit margins at individual locations, investors can assess franchisee success and identify opportunities for improvement. Strong, repeatable unit-level economics provide evidence that a franchise’s growth model can scale.
4. How can franchise brands improve their readiness for private equity due diligence?
Franchise brands can improve due diligence readiness by creating a standardized reporting process, consolidating financial data across locations, and maintaining timely access to accurate financial and operational metrics. Replacing disconnected spreadsheets and manual reporting with scalable data infrastructure makes it easier to demonstrate financial performance, evaluate location-level risks, and answer investor questions with confidence.
5. How does financial reporting impact a franchise’s valuation?
Reliable financial reporting helps investors assess a franchise’s profitability, growth potential, and financial risks. Standardized location-level P&L statements and comparable performance metrics allow private equity firms to evaluate unit-level economics and determine whether a brand’s growth is sustainable. Inconsistent reporting or incomplete financial data can create uncertainty during due diligence and make it harder to establish confidence in the business.
