While real estate investors often aim for a 12-16% IRR, successful franchisees target returns north of 25%. This superior cash-on-cash return, separate from the final enterprise value at sale, highlights the model's potential for rapid wealth creation compared to other asset classes.

Chick-fil-A's franchise structure is unique. They cover the build-out costs for a low entry fee but take a 15% royalty and 50% of profits. This structure effectively makes the operator a highly compensated manager with significant income but without the equity upside or multi-unit potential of a traditional owner.

Historically, private equity was pursued for its potential outperformance (alpha). Today, with shrinking public markets, its main value is providing diversification and access to a growing universe of private companies that are no longer available on public exchanges. This makes it a core portfolio completion tool.

The term 'private equity' is now insufficient. The M&A market's capital base has expanded to include sovereign wealth funds and large, tech-generated family offices that invest directly or co-invest like traditional PE firms. This diversification creates a larger, more resilient pool of capital for deals.

Rather than competing in crowded auctions, elite private equity firms pursue a differentiated "executive new build" strategy. They partner with proven operators to build new companies from scratch to address a market need, creating proprietary deals that other firms cannot access.

Top-tier VC firms like Andreessen Horowitz are evolving beyond traditional venture investing. They are mirroring the playbook of private equity giants like Blackstone by acquiring other asset managers, expanding into new verticals like wealth management, and preparing to go public, prioritizing AUM growth.

Former investment banker Cal Gulapali built a portfolio of 120 franchise units across eight different brands in seven years. He acts as the skilled operator, using capital from private equity and family offices to fund acquisitions while retaining 30-60% equity, showcasing a modern playbook for rapid scale.

The scale of wealth creation in franchising is vastly underestimated. A surprising statistic reveals that the franchise business model has produced more millionaires than the total number of players who have ever participated in the NFL, highlighting its power as a consistent, repeatable path to wealth.

Venture capitalists often have portfolio companies that are profitable and growing but will never achieve the breakout public offering VCs need. These companies can become a distraction for the VC and can be acquired by PE investors who see them as attractive, stable assets.