Dive Brief:

• Flynn Group is reportedly seeking a majority stake sale worth about $5 billion, Reuters reported last week, citing sources familiar with the matter.
• The country’s largest franchisee generates $4.5 billion in sales annually, boasting 30% in annualized growth and runs over 2,600 units across seven brands, per the franchisee’s website.
• Last year, Flynn acquired 37 Planet Fitness gyms, rebranding itself from Flynn Restaurant Group to Flynn Group. It also purchased Pizza Hut Australia and signed a master franchise agreement with Wendy’s to open 200 stores in Australia.

Dive Insight:

The restaurant industry has already had a more active M&A year in the first two months of 2024 than all of 2023, with Craveworthy Brands buying a majority stake in Dirty Dough Cookies and RBI acquiring its largest franchisee, Carrols Restaurant Group, for $1 billion.

Comparatively, there were only a handful of noteworthy acquisitions last year, namely Roark’s $9 billion-plus buy of Subway that has yet to close. There also are several other pending sales in the works this year, with Thai Union Group planning to sell its stake in Red Lobster. Reuters also reported potential sales of Tropical Smoothie Cafe and CEC Entertainment, which could result in transactions worth $2 billion and $1 billion, respectively. 

If Flynn Group’s sale comes to fruition it would likely be the largest sale of the year. Flynn is partially owned by Ontario Teachers’ Pension Plan, private equity firm Main Post Partners and Flynn Group management. Each of these entities owns roughly one-third of the company, per Reuters, which said that the investors could sell part of their stakes but still remain stakeholders in the company. Potential suitors include private equity firms and sovereign wealth funds, per the publication.

Flynn became the country’s largest franchisee after it bought US Beef Corp in 2018, which added 368 Arby’s units to its then roughly 1,200-unit portfolio. It then bought 925 Pizza Hut restaurants and over 100 Wendy’s units from bankrupt franchisee NPC International in 2021 for $553 million, skyrocketing the franchisee to over 2,000 units. The company’s portfolio also includes over 125 Panera units, over 280 Taco Bell restaurants and more than 440 Applebee’s units, according to its website.