A franchise raise for franchisors and multi-unit operators
A franchisor raising equity sells its system: unit economics, royalties and growth in units. A multi-unit operator raising sells its stores and development rights. Both should put the current FDD and unit-level data at the center of the room, and operators need the franchisor's consent plan in writing.
- 23Disclosure items required in an FDD under the FTC Franchise Rule (16 CFR 436.5)
- 14 daysMinimum time the FDD must be furnished before a prospect signs or pays (16 CFR 436.2)
Folder index
- 01 Overview Brand, system size, growth plan.
- 02 FDD Current Franchise Disclosure Document and state registrations.
- 03 Unit economics Store-level sales, margins, ramp, build-out costs.
- 04 System data Openings, closures, transfers, same-store sales.
- 05 Franchise agreements Standard agreement, development agreements, amendments.
- 06 Franchisee health Royalty collections, defaults, franchisee survey results.
- 07 Supply and vendors Approved supplier agreements and rebates.
How this raise works
Franchisors raise from private equity and growth investors who look at the royalty stream, same-store sales, unit openings and closures, and franchisee health. The Franchise Disclosure Document under the FTC Franchise Rule has 23 required items, including financial performance representations (Item 19), outlet data (Item 20) and financial statements (Item 21). Investors read it as a summary of the system, but it is a franchise sales document, not an offering document for the equity raise.
Multi-unit franchisees raise equity or debt to build out territories under development agreements. Investors and lenders check store-level profit, the development schedule, franchise agreement terms, and the franchisor's consent rights over transfers and changes of control, which almost every franchise agreement includes.
If the franchisor is also selling new franchises during the raise, keep the two processes apart. Franchise sales follow the FTC Rule, including furnishing the FDD at least 14 calendar days before a prospect signs or pays, and state rules in registration states. The equity raise follows securities law.
Best data rooms for this raise
The 16 rooms re-ranked with this raise's weights. Raise workflow carries the most weight here.
- Investor tracking 19%
- Permission control 16%
- Raise workflow 23%
- Investor onboarding 19%
- Cost of a raise 23%
-
Full deal room with AI, a listed price and a 14-day free trial.
Price $149 a month Trial 14-day free trial Features 8 of 12 listed -
Long-running M&A platform with layered permissions and fast support.
Price Priced on request Trial Free trial available Features 9 of 12 listed -
Simple flat-rate deal room with signing and Q&A.
Price $250 a month Trial Free trial available Features 8 of 12 listed -
Deal room with AI and readiness tools for preparing a process.
Price Priced on request Trial Free trial available Features 8 of 12 listed -
Bank-grade platform for large processes, with AI and a mobile app.
Price Priced on request Trial Demo on request Features 10 of 12 listed -
Deal room with a listed monthly price and an open API.
Price $299 a month Trial Free trial available Features 7 of 12 listed -
Content cloud with watermarks and signing, priced per user.
Price $15 a user a month Trial Free trial available Features 9 of 12 listed -
Easy, reliable deal room favored by mid-market advisers.
Price Priced on request Trial Free trial available Features 7 of 12 listed -
One of the oldest deal rooms, common on bank-led transactions.
Price Priced on request Trial Demo on request Features 8 of 12 listed -
European deal room strong in real estate, with AI features.
Price Priced on request Trial Demo on request Features 8 of 12 listed
Places 11 to 16: DealRoom (6.9), SmartRoom (6.8), ShareVault (6.7), Digify (6.4), DocSend (6.2), Venue by DFIN (6.1)
Folder index for the room
A starting index for this raise. Number the folders so the order survives exports and investors can cite them in questions.
- 01 OverviewBrand, system size, growth plan.
- 02 FDDCurrent Franchise Disclosure Document and state registrations.
- 03 Unit economicsStore-level sales, margins, ramp, build-out costs.
- 04 System dataOpenings, closures, transfers, same-store sales.
- 05 Franchise agreementsStandard agreement, development agreements, amendments.
- 06 Franchisee healthRoyalty collections, defaults, franchisee survey results.
- 07 Supply and vendorsApproved supplier agreements and rebates.
- 08 ConsentsFranchisor consent requests and responses for operator raises.
- 09 LitigationFranchisee disputes and regulatory matters.
- 10 Corporate and financialsStatements, model, cap table.
Features this raise needs
| Feature | Why | Ellty | iDeals | SecureDocs | Ansarada | Datasite | CapLinked |
|---|---|---|---|---|---|---|---|
| Investor activity log | A per-investor record of opens, pages and minutes, which tells the IR team who is in diligence and who stalled. | ||||||
| Q&A module | LPs and lead investors post questions on a file; the deal team routes each one, drafts a reply and decides who sees it. | ||||||
| NDA e-sign step | Confidentiality terms an investor must accept in the room before folder one appears. | ||||||
| Drag-and-drop folders | An entire numbered folder tree goes up in a single drop, structure intact. |
Setting up the room
- 01
Update the FDD
Make sure the current FDD and state registrations are in order before the raise.
- 02
Build unit-level data
Show store sales, margins, ramp and closures in a format investors can rebuild.
- 03
Separate franchise sales
Keep prospective franchisee materials out of the investor room.
- 04
Get consent early
For operator raises, ask the franchisor about consent conditions before signing a term sheet.
- 05
Show franchisee health
Include royalty collection and default data, not only system sales.
Common mistakes
- Treating the FDD as the offering document for an equity raise.
- Unit economics that differ from FDD Item 19 figures with no explanation.
- An operator raise signed before the franchisor's consent terms are known.
Calculators for this raise
Or take the four-question quiz and check the raise checklist.
Questions and answers
How do franchisors raise capital?
Commonly from private equity or growth investors, valued on royalties, unit growth and system health, with the FDD as a key reference document.
Is the FDD an offering document for investors?
No. It is a franchise sales disclosure under the FTC Rule. An equity raise follows securities law and needs its own documents.
Do multi-unit operators need franchisor consent to raise?
Usually, for any transfer or change of control. Check the franchise and development agreements.