Private Equity Investing in Franchise Companies Need Franchisee Satisfaction Data—Here’s Why

Franchisee satisfaction can make or break the potential to scale a brand, yet it often goes overlooked by private equity firms

Private equity (PE) firms are increasingly active in franchising these days, and they’re here to stay. Alicia Miller wrote a great book on private equity, Big Money in Franchising. I recommend it to anyone and everyone in franchising to better understand how PE is involved and their goals in investing. While private equity investing in franchise companies are highly disciplined in their investment approach, there’s one critical element they often overlook—and it can make or break the deal. 

What Private Equity Misses in Due Diligence 

Private equity firms have a very defined process they follow when looking at acquisitions. They assess financials, systems, and leadership. They build models to help them understand how and when to build these brands while they are invested. But what they struggle to quantify in these formulas is the health of the franchisee network, which is the true strength of the system. 

You’re not just investing in a brand. You’re investing in the network of people. How strong is it? Learn more about how FBR can provide you with human-centric data to measure the strength of a system.

Why Franchisee Sentiment Is Critical to Private Equity Investing in Franchise Companies

There are 5 key questions every private equity investor should be asking before buying a franchise brand, starting with How happy are franchisees?

A franchise network is different from employees. There isn’t the same level of command and control that you have in a corporate structure. That means change management is even harder because you have to get buy-in to your ideas from a group of people who are deeply invested in the success of their own business, not mandate them.  

Franchisees who are unhappy or disengaged stall system growth, yet most private equity firms investing in franchise companies miss the crucial importance of the franchisor-franchisee relationship before they invest. Franchisee satisfaction data reveals what P&L’s don’t—it highlights red flags that signal operational breakdowns, culture issues, or complacency. 

Brands with high franchisee satisfaction experience outperform those with poor satisfaction in 7 key areas that indicate system health. (source: FBR benchmark data)

How Can Private Equity Firms Assess Franchisee Satisfaction?

The best way to measure franchisee satisfaction and engagement is to conduct a franchisee satisfaction survey, ideally through an independent third party. Franchise Business Review’s (FBR) franchisee satisfaction survey measures franchisee satisfaction and engagement and provides investors and private equity firms with objective, reliable data on the health of a franchise system.

How FBR aids PE firms with due diligence pre-acquisition:

• Mitigate risk. We uncover red flags like low franchisee satisfaction, poor support ratings, or leadership trust issues that don’t show up in the FDD or financials. This helps you avoid investing in brands with hidden structural weaknesses, such as potential franchisee lawsuits or poor unit economics masked by top-line growth, that could stall growth post-acquisition.

• Benchmark franchisee satisfaction vs. industry. FBR has aggregated 20+ years of data from more than 1,300 brands across all sectors. While you may choose to do your own survey or rely on internal survey data from the brand, what you won’t have is a point of comparison. FBR’ survey provides benchmark data to compare the performance of the brand to the overall industry (350-400 brands survey each year) and to the specific segment the brand is in. Knowing how the franchisee sentiment compares to the others you’re trying to outgrow can help you identify the most important areas to tackle, and which differentiators to lead with in your marketing campaigns.

• Dig deeper where it matters. Use the data we collect to identify where you need to probe deeper in conversations with franchise leadership. Uncover specifics from franchisee feedback and root causes before closing the deal.

• Uncover operational or leadership weaknesses not visible in the FDD. Our data reveals where franchisees feel unsupported or disconnected, pointing to gaps in staffing, training, or leadership that signal where additional investment will be required to stabilize and scale the brand post-acquisition.

How FBR helps PE firms during hold period:

• Benchmark ongoing franchisee satisfaction to monitor system health and drive accountability. FBR data becomes an internal KPI, helping align teams around franchisee experience. Brands track overall and departmental scores, often down to individual Franchise Business Coach ratings to inform coaching, set performance expectations and/or bonuses, and ensure franchisee support stays a top priority. It also demonstrates to franchisees that their success matters to you when they know your team is focused on these scores.

• Support leadership teams in building trust, retention, and alignment. Franchise leaders are trying to accomplish a lot. Giving them data that helps them prioritize the needs and challenges that impact the most franchisees helps them focus on key priorities that will move the needle.

• Leverage strong feedback for growth and credibility. High-performing brands can earn awards, gain exposure to qualified candidates through FBR, and use third-party reports to validate their culture and franchisee satisfaction. We help build trust with prospects through independently validated data, not sales pitches or internal survey data.

• Boost visibility and credibility online: Google favors third-party reviews and award recognition. Being listed on FBR’s website enhances SEO, boosts credibility, and gives candidates confidence before they even hit your website.

• Evaluate the leadership team. Scores in the Leadership section of the franchisee survey is one of the ways the board/private equity groups can assess or create KPIs around the leadership team’s performance.

How FBR adds value at exit:

• Use satisfaction data to prove brand strength to future buyers. Third-party validation from franchisees is a powerful asset at exit. It demonstrates consistent performance, strong franchisee relationships, and a healthy system—giving potential buyers confidence in the brand’s long-term viability and reducing perceived risk.

• Show trendlines of operational improvement tied to investment. FBR data tracks progress over time, making it easy to show how strategic investments like new leadership, systems, or support resources have measurably improved franchisee satisfaction and system performance. Even if you don’t qualify for awards, it can show the progress that’s been made.

Protect Your Private Equity Investment in Franchising

Franchise Business Review helps private equity firms focus on what matters most: reducing franchisee churn, accelerating returns, and building scalable, high-performing systems. Our data gives you clear visibility into the strength of the network you’re investing in AND the tools to improve it. 

If you’re investing in a franchise system without understanding what the franchisees think, you’re flying blind. We help PE firms bring visibility to what matters most.

Whether you’re evaluating a brand, actively scaling it, or preparing for exit, FBR provides the insight to drive smarter decisions and stronger results. Learn more about how FBR supports private equity franchise investments or schedule a 10-minute demo to see how we can support your portfolio.

Related Resource: The 10 Biggest Roadblocks to Franchise Performance

Want to grow your system? Don’t let these common roadblocks slow you down!

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• Why franchisees often have unrealistic expectations for their business
• Why you could be wasting money on your development efforts
• How to get actionable data to measure progress and drive growth

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