After a quieter period, mergers and acquisitions (M&A) in the franchise and restaurant industries are showing renewed momentum. Though deal volumes have not yet returned to pre-pandemic levels, strategic buyers, private equity firms, and multi-unit operators are reengaging the market with a pragmatic mindset. Today’s franchise M&A environment demands more than capital—it requires detailed planning, robust diligence, cultural alignment, and strategic discipline.
At C Squared Advisors, we’ve worked on transactions across a wide range of brands and operator types. What we see consistently is that success in today’s environment hinges less on timing the market and more on being fully prepared when the right opportunity arises. Well-prepared buyers and sellers are closing deals—those who are not, aren’t even getting to the table. Franchise brands operate in a uniquely layered ecosystem involving franchisors, franchisees, and field-level teams. Navigating this complexity calls for more than financial acumen—it requires a deep appreciation for the operational and relational dynamics that define the sector.
Diligence Beyond the Numbers
Franchise transactions are inherently complex. Buyers must evaluate more than just financial performance—they need to understand franchise agreements, unit-level economics, development obligations, and the strength of franchisor-franchisee relationships.
Key diligence areas include:
- Transfer rights and franchisor approval protocols
- Franchisee performance, tenure, and pipeline stability
- Royalty and marketing fund compliance
- Development timelines and brand standards
Overlooking these details can introduce costly risks. Experienced advisors can help buyers navigate brand-specific requirements and identify operational red flags that don’t show up on a balance sheet.
Readiness Wins Deals
In today’s fast-moving environment, preparedness is a differentiator. Deals are increasingly awarded to buyers who not only offer strong valuations but also demonstrate certainty of close and professionalism throughout the process.
Buyers should:
- Secure capital structures in advance
- Engage legal and financial advisors early
- Prepare diligence workflows and approval processes before entering the market
Sellers, in turn, must anticipate buyer questions and present clean, organized data—particularly around franchisee performance, transfer obligations, and systemwide trends. Delays, indecision, or internal misalignment often derail otherwise promising opportunities.
Structuring Deals for Franchise Realities
Franchise M&A requires structures that account for sector-specific nuances. Earn-outs, seller notes, and contingent payments are increasingly used to bridge valuation gaps while protecting both sides from downside risk. But these tools only work when they’re aligned with brand maturity, franchisee dynamics, and the acquirer’s long-term strategy.
Franchise-specific considerations—such as approval rights, transfer fees, and franchisee communications—must be embedded in the negotiation and execution process. Advisors with franchise experience can help navigate these layers and build structures that support post-close success.
Strategic Growth Requires Operational Discipline
Many multi-unit operators are pursuing diversification—whether by expanding into adjacent categories or entering new geographies. But growth for its own sake is no longer acceptable. Successful acquirers assess whether a new concept fits their existing infrastructure, team capabilities, and long-term goals. Scenario planning, operational modeling, and benchmarking are critical to ensure growth doesn’t outpace internal capacity.
Execution, Not Just Integration
Integration planning matters—but it’s not just about back-office systems or cultural compatibility. What matters more is clarity of execution: how the acquired business will function within the buyer’s framework, how franchisees will be engaged, and how operational excellence will be maintained post-close.
Deals often stumble not due to poor modeling, but because of mismatched assumptions about decision rights, support models, and performance expectations. The best-prepared buyers establish transition roadmaps and accountability structures from the outset, reducing friction and enabling faster results.
Conclusion: Success Favors the Prepared
In franchise M&A, the value lies not only in financial returns, but in acquiring scalable processes, operational expertise, and strategic brand positioning. In a market where deal speed and certainty matter more than ever, being prepared is the true competitive advantage.
Strong valuations will always be important. But the companies closing deals today—and creating long-term value—are those who bring discipline, operational insight, and strategic clarity to every step of the process.
Tori Wagner is a seasoned financial professional at C Squared Advisors, LLC, with over a decade of experience in franchise lending and financial management. She has led high-level initiatives for top brands like Dunkin’, Wendy’s, and Popeyes, managing client portfolios exceeding $500 million. A crucial part of C Squared, Tori leverages her extensive industry knowledge to drive strategic business development, enhance client relationships, and provide expert financial guidance to multi-unit operators, private equity investors, and franchisors.
