Private equity interest in franchising has accelerated dramatically over the past decade. From foodservice and home services to health, wellness, and B2B platforms, PE firms continue to target franchise systems because of their scalability, recurring revenue, and capital-efficient growth model. But while franchising is inherently attractive to investors, not every franchise brand is “PE-ready.” Private equity does not buy concepts—it buys systems, predictability, and upside. Structuring your franchise business for a PE transaction requires intentional planning well before you go to market. The brands that command premium valuations are not simply growing fast; they are engineered for institutional ownership. This article explains how to structure your franchise business for sale to private equity, what PE firms look for in franchise platforms, and how founders can position their companies to maximize valuation and deal quality. Why Private Equity Likes Franchise Businesses Before discussing structure, it’s important to understand why PE firms like franchises in the first place. Private equity firms are drawn to franchising because it offers: - Recurring, predictable revenue (royalties, marketing fees) - Asset-light expansion funded by franchisees - Scalable unit economics - Decentralized operating risk - Multi-unit and roll-up potential - Strong exit optionality (secondary PE sale or strategic buyer) However, PE firms are selective. They want franchise systems that behave more like platform businesses than founder-dependent organizations. Start With the Right Corporate Structure 1. Clean, Simple Entity Structure Private equity buyers strongly prefer clean corporate structures. Ideally: - One parent holding company - Clear separation between franchisor entity and any operating units - No unnecessary sister entities or intercompany complexity If the founder owns company-owned locations, those should either: - Be rolled into a clearly defined operating subsidiary, or - Be separated entirely from the franchisor entity