Mega 99: Multi-unit ownership, diversification, and private equity drive franchising

In 2024, the trend of multi-unit ownership continued to dominate the franchising landscape with multi-unit operators controlling more than half (56.18%) of all franchised units across the country. Multi-unit operators continued to scale up, consolidate their holdings, and diversify their portfolios.

Notably, the food sector is at the forefront of this trend with multi-unit owners controlling 76% of the units as compared to the non-food sector. The Mega 99 ranking also highlights this with the majority of the franchisees owning food brands. There are some exceptions in non-food categories, such as beauty services, lodging, and automotive franchises.

See the graph for a snapshot of the industries and the percentage of units owned by multi-unit operators. Industry % Multiple Units QSR 82.57% Beauty-Related 78.

45% Restaurants (Sit-Down) 71.86% Baked Goods 59.93% Automotive 57.

86% Real Estate 55.28% Frozen Desserts 53.94% Retail Food 52.

62% Business-Related 51.05% Clothing & Accessories 50.98% Computer Products and Services 45.

73% Health & Fitness 45.09% Personnel Services 40.99% Services-General 39.

03% Child-Related 34.52% Pet-Related Products/Services 33.22% Education-Related 32.

62% Sports & Recreation 32.42% Retail Stores 30.70% Party-Related Goods/Services 30.

21% Security-Related 22.91% Lodging 21.95% Decorating & Home Design 20.

27% Printing 18.97% Building & Construction 17.74% Maintenance Services 15.

10% Publications 9.18% Photographic Products/Services 4.44% Travel 3% The Flynn Group continues to lead the charge by operating more than 2,700 units.

The group diversified into health and fitness in late 2023 with the Planet Fitness brand. It also acquired Wendy’s restaurants from an established franchisee, speculated to be The Briad Group, and Panera Bread from Blue Ridge Bread in 2024. Large operators like Flynn are leveraging their resources to acquire multiple units and diversify their holdings to mitigate risks and maximize growth potential.

As franchisees scale up their portfolios, the trend of diversification is becoming more pronounced. Anchor Point Management/Pacific Bells, primarily a food franchisee, added 7 Brew Drive-thru Coffee to its portfolio and also owns units in non-food brands, such as Signarama and Fully Promoted. Similarly, the Cafua family, which owns more than 200 Dunkin’ units, has signed a development deal with Qdoba, marking its first foray into a non-coffee food brand in the Pennsylvania region.

This diversification allows mega operators to hedge against risks and provides additional revenue streams that can help sustain operations during slow periods in certain sectors. As the trend of multi-unit ownership expands, private equity investments are playing a significant role in shaping the future of franchising. One such example of this growing trend is Three20 Capital Group, which partnered with Trivest Partners to invest in the Office Pride brand in 2022.

This group is also one of the largest franchisees for Massage Envy and has continued to expand its portfolio with investments in Sola Salons. With private equity capital, these groups are likely to expand aggressively and invest in building strong, diverse portfolios. The expansion of private equity investments and the diversification of large operators into non-food brands are additional key trends that are contributing to the evolving landscape.

As these shifts take place, the future of franchising will be characterized by sophisticated, large, and diversified operators with the scale and capital to drive the industry forward. *Ambika Oberoi is director of information management at FRANdata.