M&A activity snapshot
Restaurant M&A has shifted toward franchisors and away from franchisee groups. Capstone Partners tracked 32 restaurant deals in 2025 through late October, down 28.9% year over year. Franchisor deals rose to 21, or 65.6% of sector volume, while franchisee-segment deals fell by nine.
Large franchisee consolidators keep growing anyway. Flynn Group's March 2025 purchase took it to 1,027 Pizza Huts, nearly 20% of the U.S. Pizza Hut system. Sun Holdings, which operates 1,800 locations, bought Bar Louie out of bankruptcy less than a year after buying Uncle Julio's.
The largest franchisee deal of the cycle was a buyback. Restaurant Brands International bought Carrols, which operated 1,022 Burger King restaurants in 23 states, and plans to refranchise the majority of the portfolio to smaller operators over seven years.
Who is buying
Large multi-unit franchisees. Operators with hundreds of units in a system buy neighbors in the same brand. In the first half of 2026, Mas Restaurant Group sold 87 Taco Bells, with Southpaw buying 43 in greater Columbus and Ghai Restaurants buying 44 in Houston. Some franchisees now buy whole brands: Jack in the Box agreed to sell Del Taco to franchisee Yadav Enterprises for $115 million in cash.
PE-backed franchisee platforms. Bain Capital bought Sizzling Platter in a deal worth about $1 billion. The franchisee reported $1.1 billion in sales in 2024 across its Little Caesars, Wingstop, and Jamba units, plus other brands. Smaller sponsors are active too: Franchise Equity Partners took a significant stake in the second-largest 7 Brew franchisee, and Eyas Capital acquired 120 units from the largest Bojangles franchisee.
Franchisors. Brands buy back units to remodel and resell them, as with Carrols. Their preferences shape who else can buy. CNBC reports Burger King's franchise policy means it will likely have fewer operators backed by private equity firms, and that it expects to sell about 200 restaurants in 2026.
Sale-leaseback investors. Net-lease buyers purchase the real estate under franchised units, a common way for sellers to separate property value from operating value.
What buyers look for
Unit economics come first: average unit volume (AUV), restaurant-level margin, and the capital each unit needs. Margins are thin. The National Restaurant Association reports a median prime cost of 65 cents per sales dollar and median pre-tax income of 4.0% for limited-service restaurants. Small swings in labor or food cost move EBITDA, so buyers ask for monthly P&Ls by unit.
Remodel and development obligations are a major diligence item. Capstone notes that projects that once hit payback in two or three years may now take four or five years because of higher capital investment per unit. Buyers price in any remodel deadlines in the franchise agreement.
The franchisor relationship can decide the deal. The FTC Franchise Rule requires the disclosure document to cover franchisor approval of transfer, conditions for approval, the franchisor's right of first refusal, and its option to purchase. Buyers check the seller's standing with the brand, any defaults, and remaining agreement terms.
State labor rules vary. California's $20 per hour fast food minimum wage took effect April 1, 2024 and covers limited-service restaurants that are part of a chain of at least 60 establishments nationwide. That captures franchisees of national brands but not small independent chains.
What makes a strong company
A franchisee group that draws multiple bids typically shows:
- Units in good standing with the franchisor, with no open defaults and remodels current or already funded.
- Contiguous markets, so a buyer gains route density for district managers and supply.
- AUVs at or above the system average reported in the brand's FDD Item 19, where one exists.
- Restaurant-level P&Ls by unit for at least three years, reconciled to tax returns.
- Long remaining terms on franchise agreements and leases, with renewal options.
- A management layer of area directors who stay after the sale.
Valuation and deal structure
Franchisee groups trade below franchisors because they carry the operating risk and capital needs. RBI valued Carrols at about $1 billion of enterprise value, 6.6x 2024 estimated EBITDA. By contrast, Capstone's examples of franchisor deals include RaceTrac's purchase of Potbelly at 8.6x EV/EBITDA and Blackstone's purchase of Tropical Smoothie Café at 20.0x. No advisory firm publishes a verified multiple range for smaller franchisee groups.
Unit-level prices help where multiples are not public. In 2026, Red Robin sold 69 units to Op Burgers for $62.5 million and 30 units to Evergreen Dining for $23.5 million.
Real estate often sits in a separate transaction. Four Corners Property Trust bought nine Burger King properties for $19.9 million from franchisee Ampler at a 6.8% cap rate, on 20-year triple-net leases. Deals also commonly include franchisor transfer fees and required remodel commitments, which the buyer prices into the offer.
Outlook
Expect steady franchisee-to-franchisee trading and refranchising through 2027. The International Franchise Association forecasts franchise establishments growing 1.5% in 2026, to 845,000 units. Burger King's refranchising of Carrols units will add supply for smaller local operators over several years.
Capital costs and labor rules will keep pressure on unit margins. Groups with current remodels, clean franchisor relationships, and documented unit-level profit will have the most buyers in the next 12-24 months.
Own a multi-unit franchise group and want a market-data starting point? Run the valuation tool, or see the broader Consumer & Retail M&A overview. For how platforms find add-ons off-market, read trigger-based deal sourcing.