Some of the more prominent owners of commercial real estate inthe United States are the franchisors of the well-known brandsfrequented every day. McDonald’s, for example, is well-known tohave an extensive real estate portfolio. However, there are alsomany lesser known franchisors – often regional – who operateanywhere from 50 to several hundred free-standing units,particularly in the restaurant field. Some of this commercial realestate is used for company-owned units, and some is leased tofranchisees.A majority of these properties are also net leased toinvestors. Though it is somewhat unknown, there is actually aviable market for these franchisors.

Typical investors in the franchisor market include:

• Private equity buyers
• Strategic players wishing to buy out competition in theirrelevant field
• Real estate investors and companies wishing to acquireportfolios of commercial real estate that comes with ownership ofthe Franchisor.

Market factors such as low interest rates, lack of high qualitynet lease product and an ease in financing conditions has made theacquisition of franchisors a more popular and realistic goal formany investors. In-fact, a new website - Franchisor Pipeline - haseven sprouted up that serves as a specific marketplace for thesedeals.

According to the founder of Franchisor Pipeline, Bret Lowell, along-time franchise and M&A attorney, franchisor sales areproceeding at a relatively rapid pace, and include recent sales ofsuch well-known brands as Benihana, Curves, Huddle House, Midas,O’Charley’s, Party City, Payless Shoe Source, Taco Mac, and more.When transactions of this sort include real estate owned, the newowners often look to bifurcate the real estate from the franchiseoperations in order to unlock the equity in the real estate and tomaximize the value of the acquisition.