Operator Playbook
Franchise Equity Partners is betting $1 billion that the best QSR operators don't need to sell — they need a partner. Here's what that means for you. Educational content — not investment advice.
By Justin K. Sellers · 11 min read · March 9, 2026
Disclosure: This is independent editorial content. QSR Research Hub has no financial relationship with Franchise Equity Partners. This profile is based entirely on publicly available information. Not investment advice. Always conduct your own due diligence and consult qualified professionals before any capital decision.
Most operators hear "private equity" and picture the same thing.
Someone buys your business. Installs their own people. Loads the operation with debt. Sells it five years later at a profit you barely participate in. You either cash out and walk away — or stay on as a salaried employee in a company you used to own.
That picture is not invented. It reflects how most traditional PE-backed restaurant deals have been structured.
But it is not the only model. And for a specific type of multi-unit QSR operator — profitable, growing, not ready to sell — a different structure has emerged that most operators have not heard of.
It is called permanent minority capital. One firm has built its entire identity around it.
Franchise Equity Partners launched in November 2021. The firm is headquartered in New York and was co-founded by two retired Goldman Sachs partners: Michael Esposito and Scott Romanoff, who each spent roughly 28 years at Goldman Sachs.
This is not a generalist PE fund that occasionally buys restaurants. Franchising is their entire mandate. Any business where the operator runs locations under a franchisor agreement.
Their verticals include quick-service restaurants, automotive dealerships, beverage distribution, heavy equipment dealerships, residential and commercial services, fitness, health and beauty, professional sports, and other multi-site consumer services.
The firm launched with a $1 billion target portfolio, anchored by HPS Investment Partners — one of the largest credit and private equity managers in the world with approximately $148 billion in assets under management as of late 2024. By early 2025, FEP had deployed nearly two-thirds of that initial capital — approximately $650 million.
As of March 2026, the portfolio spans 14 companies generating $5 billion in revenues across 1,800 storefronts in 12 countries.
Their restaurant vertical is led by Kevin Burke, formerly the founder and managing partner of Trinity Capital — widely regarded as the leading QSR investment banking firm in the country.
Before you evaluate any investor conversation, you need a framework. Three fundamentally different capital structures exist in the franchise space:
| | Traditional Buyout | Growth Equity | FEP Model | |---|---|---|---| | Stake | Majority / 100% | Minority or Majority | Minority — you keep control | | Operations | Installs own leadership | May stay in seat | You remain the operator | | Timeline | 5–7 year exit clock | Fund-driven timeline | Permanent — no forced exit | | Returns | Leveraged flip | Growth + exit | Dividends + appreciation |
The differences are not cosmetic. They determine who controls your business, who sets your timeline, and what you are actually selling when you take the money.
Scott Romanoff explained FEP's philosophy directly at the firm's launch: "We don't want to be an operator. We want the operator to remain the operator, and we want to be passive and financial in our approach."
That is a fundamentally different sentence than what most operators have heard from PE.
These three words are FEP's entire pitch. Here is what each one means in practice.
FEP does not take a controlling stake. You own the majority of your business after the deal. You retain primary operating control, though specific governance terms — including any veto rights — are defined in the deal documents.
This changes the entire power dynamic. With a controlling buyer, you work for them. With a minority partner, they work alongside you.
FEP is not showing up Monday morning. They are not installing a board member in your weekly ops calls.
Esposito has described the FEP approach this way: "Our bespoke approach, creativity and extensive investment experience, coupled with our strong capitalization, allow us to focus on the individual needs of entrepreneurs we invest alongside."
This is the most important word — and the most different from traditional PE.
Conventional PE funds have a lifecycle of 7–10 years. That clock creates pressure. If the fund is winding down and your business has not hit the target multiple, you get pressure to sell on their timeline, not yours.
FEP structures its capital as permanent — designed without a fixed fund expiration or traditional 5–7 year exit clock. Their return model is built on dividend yield and long-term appreciation — not a leveraged flip in year five.
"The private equity model of five to seven years, a lot of leverage and then needing to exit is not friendly to the franchise-type model." — Scott Romanoff, Co-Managing Partner
FEP has publicly stated they target operators running 50 to 75 locations.
Their confirmed deals include a Taco Bell franchisee, the largest Focus Brands snack franchisee, a Planet Fitness franchisee, and in September 2025, a majority stake in 7 Crew — the second-largest 7 Brew Drive-Thru Coffee franchisee with 50 locations and a development agreement for 200 more. (Note: the 7 Crew deal was a majority stake — not all FEP transactions follow the minority model.)
The pattern across those deals: established operators with strong unit economics, proven track records, and growth ambitions that outpace what organic cash flow alone can fund.
Esposito has said they look for "super strong operators" and that the partnership is ultimately personal: "If we're going to be minority, passive, and permanent, we really want to partner with people we like and trust."
You run 50 profitable locations. You want 120. Bank financing has limits. You do not want to sell equity to a buyer who takes control. FEP provides expansion capital while you stay in the operating seat.
Situation 2 — Generational TransferYou have built significant wealth in your franchise portfolio. You want to take some chips off the table without a full exit. FEP provides liquidity on a portion of your equity without requiring you to hand over the keys.
Situation 3 — DiversificationYour entire net worth is tied up in one brand, one market. You want financial diversification. A minority equity sale to FEP generates cash you can deploy elsewhere while your business continues under your leadership.
Situation 4 — Shareholder RationalizationYour business has multiple shareholders. Some are disengaged or want out. You need to consolidate ownership without taking on crushing debt. FEP provides liquidity for sellers as an aligned long-term partner while engaged shareholders remain in control.
Confirmed investments as of March 2026:
Fresh Dining Concepts — June 2022$44 million minority equity investment. Largest Focus Brands snack franchisee — approximately 160 Auntie Anne's, Carvel, Cinnabon, and Jamba locations across 17 states and D.C. Capital used for M&A and new store development.
Taco Bell Franchisee — 2021FEP's first restaurant investment. Minority stake in an established Taco Bell operator. Franchisee name not publicly disclosed.
Planet Fitness Franchisee — UndisclosedMinority stake in a multi-unit Planet Fitness franchisee. Terms and operator not publicly disclosed.
7 Crew / 7 Brew — September 2025Majority stake in 7 Crew — second-largest franchisee in the 7 Brew Drive-Thru Coffee system. 50 current locations plus development agreement for 200+ more.
Velocity Auto Care — UndisclosedAcquired 38 Valvoline company-owned stores in West Texas. Converted to franchise operations. Non-restaurant but illustrates cross-vertical scope.
These apply to FEP and to any capital partner you evaluate.
1. What does "minority" mean in your term sheet?Minority stake and minority control are not the same thing. A 49% stake is technically minority but can include board seats, veto rights, and drag-along clauses that effectively transfer decision-making power. Have a qualified M&A attorney review the governance provisions before any conversation advances.
2. What happens if your LP needs liquidity?FEP's capital is backed by HPS Investment Partners. "Permanent capital" is the stated model — but if HPS ever faces its own liquidity pressure, that can create downstream pressure on FEP's portfolio positions. Ask directly: what is the mechanism for your eventual exit from my business, and under what circumstances could you be forced to sell your stake?
3. What is the expected dividend yield?If returns are built on dividends rather than a leveraged exit, understand what dividend expectations look like annually. Higher dividend obligations reduce the cash available to reinvest in your own growth.
4. What do your current partners say?Request introductions to two or three existing portfolio operators — not curated references. Ask for operators in similar verticals and similar deal sizes. Ask about the actual partnership cadence and whether the "passive" description matches their experience.
5. What happens to my deal if they raise a new fund?Capital structures evolve. If FEP raises Fund II and your deal was structured under Fund I, understand how that transition affects your rights and their obligations.
In keeping with QSR Research Hub's editorial standards, the following is not publicly available:
We do not know FEP's minimum deal size. The "50 to 75 locations" range is from a 2022 trade press interview and may have evolved. Whether they consider a profitable 20-unit operator is not publicly known. We do not know the terms of any FEP deal. No deal structures, multiples, or governance terms from any FEP transaction have been publicly disclosed. We do not know their QSR pipeline. Esposito has spoken publicly about chicken franchise acquisition opportunities as a target sector — but FEP has not announced a confirmed fried chicken QSR investment. The 7 Brew deal is their most recent QSR move and it is in the beverage category. We do not know how "permanent" performs under stress. FEP launched in 2021. Their long-term partnership model has not been tested through a full economic cycle. The "permanent capital" framing reflects their stated structure. Independent verification over a multi-year hold period does not yet exist.[DEEP_DIVE_CTA url="/article/how-to-buy-a-qsr-restaurant/" btnLabel="Read the Complete Buyer's Guide"] Want to Apply This Framework to Listings You Find? - The complete 10-part QSR acquisition framework — from valuation math to closing - Covers SDE analysis, red flag identification, due diligence questions, and offer structuring - Built from independent analysis of real listings, including this one This is how we approach every deal we analyze. Free to read. [/DEEP_DIVE_CTA]
The Shark Tank analogy is useful but imprecise. On Shark Tank, some investors want control — it depends on the deal. What FEP is doing is closer to a silent business partner who brings Goldman Sachs-level institutional relationships, takes a piece of your upside, and otherwise lets you run your business.
That is a genuinely different offer than what most multi-unit operators have been presented with.
For the right operator — profitable, growth-oriented, not ready to sell, capital-constrained for the next phase — the FEP model solves a real problem. You do not have to exit to access institutional capital. You do not have to surrender operational control. You do not have to accept someone else's five-year clock on your own business.
Three things I would want answered before any operator moves toward a conversation with FEP:
Is the 50–75 unit threshold firm? For the majority of independent QSR operators who do not yet run 50 units, this question determines whether the conversation is premature or worth having now. What does "passive" look like when performance declines? Any minority investor has contractual rights when things go wrong. Understanding those provisions in advance is not cynicism — it is standard due diligence. What does the long game look like? FEP will eventually need a liquidity event on their stake. Whether that happens on your timeline or theirs depends entirely on the specific terms negotiated — not the general model description.None of these are reasons to avoid the conversation. They are reasons to walk into it prepared.
FEP represents a new category of institutional capital in QSR franchising. For operators who have built something worth partnering around, knowing this model exists is the first step.
For the $18.6 billion acquisition context that makes this alternative relevant — including what Blackstone, Roark, and Five Guys are actually buying — The PE Acquisition Wave in QSR documents the deals reshaping brand ownership across the industry.
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This article is based entirely on publicly available information including press releases, trade press coverage, and FEP's own published materials. QSR Research Hub has no financial relationship with Franchise Equity Partners. This is independent journalism.
Operators evaluating any capital partner should conduct independent due diligence including legal review of all governance terms, reference checks with existing portfolio operators, and consultation with qualified M&A counsel.
Research conducted March 2026. Corrections: justin@qsrresearchhub.com
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Subscribe to QSR Research Hub1. Business Wire. "Franchise Equity Partners Launches to Provide Tailored Capital Solutions to Leading Franchise Operators in the U.S." November 8, 2021. https://www.businesswire.com/news/home/20211108005705/en/Franchise-Equity-Partners-Launches-to-Provide-Tailored-Capital-Solutions-to-Leading-Franchise-Operators-in-the-U.S.
2. Hotel Business. "Franchise Equity Partners launches with portfolio target of $1B." January 2022. https://www.hotelbusiness.com
3. HPS Investment Partners / BlackRock. HPS reported approximately $148 billion in assets under management as of late 2024. BlackRock completed its acquisition of HPS in 2025. https://www.hpspartners.com
4. The Deal. "Behind the Buyouts: FEP's Michael Esposito." January 17, 2025. https://www.thedeal.com
5. PR Newswire. "Franchise Equity Partners Commences Third Year With New Hires." November 9, 2023. https://www.prnewswire.com
6. Franchising.com. "Partners in PE? Private equity, meet multi-unit franchisees!" May 28, 2022. https://www.franchising.com
7. PR Newswire. "Franchise Equity Partners Invests in Second Largest 7 Brew Franchisee." September 16, 2025. https://www.prnewswire.com
8. QSR Web. "Franchise Equity Partners makes $44M investment in Fresh Dining Concepts." June 2022. https://www.qsrweb.com
9. FEP LinkedIn. Velocity Auto Care / Valvoline announcement. https://www.linkedin.com/company/franchise-equity-partners
10. Mergers & Acquisitions / FEP LinkedIn. Esposito comments on chicken franchise acquisition targets. https://www.linkedin.com/company/franchise-equity-partners
11. Franchise Equity Partners. Company website — portfolio overview, vertical focus, and capital solutions. Accessed March 2026. https://www.fep-us.com