Franchise Investing Takes a Hit in 2009

Graham Partners-backed Line-X has completed its final acquisition of the domestic Line-X master franchisers with its purchase of Line-X West. Line-X is a global provider of specialty protective coatings through a franchise network. Graham Partners acquired Line-X in 2005 and completed the acquisitions of Line-X's other master franchisers, Advanced Protective Coatings and Northwest Urethane, in December of 2009.

Private equity firms have invested over $12.5 billion in 84 franchise-related businesses (operators of franchises or companies with franchised units) since the beginning of 2007, according to the PitchBook Platform. 2009 was relatively slow with only 11 deals, as compared to 24 in 2008 and 50 in 2007. This drop is likely attributable to the fact that the top sector for franchise investing was unsurprisingly Restaurants and Bars, with 43 deals; a sector that was strongly affected by the drop in consumer spending over the last year and a half. Top investors in franchise-related companies include GS Capital Partners, Roark Capital Group, and Allied Capital.