America Runs On Dunkin’. By now every person in America and beyond has heard that tag line. Dunkin’ Brands, the franchise that is responsible for Dunkin’ Donuts and Baskin Robbins, has created one of the most recognizable retail brands in the world.
However, what the average consumer who knows the slogan may not know is that Dunkin’ Brands was owned by a consortium of private equity firms, including The Carlyle Group, Bain Capital and THL Partners, from 2006 until it went public in 2011. While this may surprise some, the fact is private equity firms own a lot of well-known franchises and they are increasingly looking for investment opportunities in the sector.
There’s no question as to why private equity firms are taking notice of the franchise model. Franchises are responsible for generating a whopping $2.1 trillion in sales globally per year and despite tough economic conditions, the industry continues to grow, according to the International Franchise Association (IFA). During a time when many companies are pulling back, franchises managed to add 150,000 jobs in 2011 and 167,000 jobs in 2012. The IFA expects continued growth in 2013.
What’s more, the franchise business model is scalable, repeatable, proven and has predictable cash flow—all the attributes that private equity firms like to see in companies they are interested in owning.