Exploring Family-Owned Franchise Opportunities with FEP’s Esposito
Franchise Equity Partners (FEP) is a private investment firm founded in 2021 by Michael Esposito, who also serves as its co-managing partner. Since its inception, FEP has experienced significant growth, focusing on investments in various sectors such as restaurants, residential services, and the auto aftermarket. Esposito recently shared insights into the firm’s strategy, evolving franchising trends, and the growing opportunity for investors due to generational wealth transfers.
As a portfolio company of HPS Investment Partners LLC, based in New York, FEP specializes in making minority, passive, and permanent investments in family- and founder-owned businesses within stable and fragmented sectors. The firm’s primary focus areas include quick-service restaurants, automotive dealerships, beverage distribution, heavy equipment dealerships, residential and commercial services, fitness, health and beauty, professional sports, and other multisite consumer services companies.
Esposito explained that FEP’s decision to target these industries was based on their recession-resistant nature, existing family ownership structures, attractive dividend yields, and the ongoing consolidation within these sectors. Additionally, many of the verticals the firm operates in have limited private equity presence, presenting a unique opportunity for FEP to capitalize on market trends.
Having previously worked as investment bankers at Goldman, Sachs & Co., Esposito and his co-managing partner Scott Romanoff transitioned into franchising after Esposito’s personal investment in a Jersey Mike’s franchise proved successful. This experience led them to establish FEP as a franchise investing business, paving the way for their current investment portfolio.
Some notable investments made by FEP include Reliable Residential Holdco, a franchisee of Neighborly Inc.’s Precision Garage Door Service brand, Velocity Auto Care, a franchisee of Valvoline Inc.’s preventative auto maintenance brand, and franchisees of popular restaurant and fitness concepts like Taco Bell Corp., Auntie Anne’s Inc., and Planet Fitness Inc. With an initial investment capital of $1 billion from HPS, FEP has deployed nearly two-thirds of the funds, highlighting its active investment approach.
Esposito’s insights shed light on FEP’s successful investment strategy, which capitalizes on industry trends, family-owned businesses, and sector consolidation. The firm’s growth trajectory showcases the value of targeted investments in recession-resistant sectors with strong family ownership structures.
In conclusion, Franchise Equity Partners’ focus on family- and founder-owned businesses in stable sectors reflects a strategic investment approach that leverages industry dynamics and market opportunities. Esposito’s expertise, coupled with FEP’s track record of successful investments, positions the firm for continued growth and success in the private equity landscape.
