Franchise Equity Partners Launches $1B Portfolio Company

Franchise Equity Partners
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Franchise Equity Partners (FEP), a privately held investment firm, has started as a portfolio company for investment funds managed by HPS Investment Partners LLC (HPS), a global alternative investment organization with over $75 billion in assets under management.

FEP’s initial focus will be on collaborating with successful owner-operators across the United States’ franchising industry, with a portfolio size target of $1 billion. Michael Esposito and Scott Romanoff, cofounders of the firm, serve as managing partners. They are both former Goldman Sachs partners who worked together for more than 28 years at the firm.

The company will invest passively in minority equity alongside established and scaled owner-operators across the United States franchise ecosystem, including hotels, restaurants, automotive dealerships, beverage distributors, heavy machinery, and other consumer and business services such as health and beauty and fitness.

FEP is strategically positioned to structure and execute permanent, flexible investments tailored to the diverse needs of US franchise owner-operators, the company reports. These needs may include organic and inorganic growth or diversification strategies, as well as estate planning and other shareholder dispositions.

According to Esposito, The franchising sector in the United States is a significant, growing, and attractive segment of our economy that we believe is currently underserved in terms of financial equity-based options tailored to the operators’ unique financial and strategic objectives.

Esposito talks about tailored approach, innovation, and vast investing expertise, along with strong capitalization, enabling them to focus on the unique needs of the entrepreneurs with whom they partner to impact business objectives exceedingly well. Esposito says that their capital and returns will be completely aligned to their partners’ success.

The two founded FEP to meet the equity financing needs of existing franchisees in the United States. From expansion to diversification to generational transfers and recapitalizations, they are committed to supporting the community as a strategic financial and business partner and providing stable and flexible permanent capital. We are extremely optimistic about the future of FEP as we explore this unique and compelling opportunity.

Esposito and Romanoff both left Goldman Sachs in 2020. The former served as chairman of the firm’s Global Financial Institutions Group. In contrast, the latter served in various capacities within the Investment Banking Division and executive office, including head of corporate development and co-head of the Financial Institutions Financing Group.

Franchise Equity Partners is currently evaluating several deals throughout its target verticals and is looking forward to interacting with established and scaled operators around the United States.