Three Growth Opportunities Multi-Unit Operators Should Be Watching

From family transitions to distressed deals, new paths to growth are taking shape.

After several years of cautious dealmaking, franchise merger and acquisition (M&A) activity is picking up. Valuations have moderated, well-run operators have rebuilt liquidity, and many owners who have weathered inflation and labor volatility for years are ready to exit. Franchisors are also putting more units on the market through refranchising.

Together, these shifts are creating opportunities for multi-unit operators looking to grow their portfolios. They’re also giving well-positioned franchisees an advantage over those struggling to keep pace. That puts a premium on knowing where opportunities may emerge—and being financially prepared to pursue them.

Growth paths emerge

Not every acquisition follows the same playbook, though. For operators in the 10 to 100-unit range, three M&A paths are creating distinct opportunities for growth.

1. Generational transitions and family exits

As longtime franchisees consider retirement, family-owned businesses can offer acquisition opportunities, both within the family and for outside buyers. These transactions can be complicated by succession plans, family dynamics, and different expectations about timing and value. Documenting a succession plan early can help operators work through those issues before an ownership change is underway.

Flexible financing can also help bridge differences between buyers and sellers. UMB recently worked with a family operating roughly 50 quick-service restaurants whose owner wanted to step away gradually. The bank structured a buyout note with a portion funded upfront and the remainder paid over 10 years, allowing the ownership transition to take place over time.

Growth acquisitions

2. Growth acquisitions

Acquiring existing units can give established franchisees a path into new markets or a way to expand their portfolios. Before pursuing a deal, however, operators must determine whether their existing business can absorb that growth.

That means looking beyond the purchase price. Leadership capacity, operational infrastructure, current unit economics, and the expected performance of the acquired stores all factor into whether an acquisition makes sense.

Lenders will also evaluate cash flow, leverage, and how much additional capital the operator may need. If profitability is expected to decline temporarily after an acquisition, operators should be prepared to explain why and show how they plan to integrate the new locations.

Distressed acquisitions

3. Opportunistic or distressed acquisitions

Underperforming locations can create another path to growth, particularly for experienced operators who believe they can improve the business. But a distressed acquisition isn’t necessarily a bargain.

Turning around struggling units can require additional spending on staffing and operational improvements, which puts temporary pressure on cash flow. Recovery can take several months, so it’s important to build a realistic timeline and account for capital needs before closing the deal.

Whatever path operators pursue, preparation matters. A banking partner that understands the business before an opportunity arises can evaluate financing needs within the larger context of the operator’s performance, liquidity, and growth plans.

UMB Bank works with franchise operators throughout the M&A process, from assessing readiness and structuring financing to planning for operational and liquidity needs. Its franchise-focused banking services also extend beyond lending to areas such as treasury management and payment solutions.