Franchise Equity Partners
Industry vet Mark LaNeve helps drive firm's plan to invest $400 M in dealerships
Automotive News, Written by Jack Walsworth, Published November 20, 2021.
A private investment firm connected to longtime automaker executive Mark LaNeve aims to spend around $400 million over the next three years buying minority stakes in auto dealerships.
New York-based Franchise Equity Partners launched this month. It was co-founded by Michael Esposito and Scott Romanoff, who are the firm's managing partners. LaNeve, a former Ford Motor Co. and General Motors sales and marketing executive, and Don Reese, former CEO of used-car retailer DriveTime, are part of the firm's leadership team. Franchise Equity Partners is backed by New York investment firm HPS Investment Partners, which has $75 billion in capital, Esposito said. HPS has allocated $1 billion to fund Franchise Equity Partners, which will invest in five areas: auto dealerships, restaurants, heavy-equipment dealerships, beverage distributors and consumer services such as health and beauty.
Esposito noted that while he and Romanoff have invested some of their own money into Franchise Equity Partners, HPS has provided the vast majority of funding. Dealerships will be Franchise Equity Partners' largest unit, Esposito said, followed by restaurants.
"We've got a very active pipeline already," Esposito told Automotive News last week. "We've already got a handshake [deal] on one specific opportunity in the auto dealer space."
The firm's investment typically will allow dealers to do one of three things: expand by opening new points or acquiring stores; buy out existing shareholders; or cash out a fraction of their own ownership stakes to diversify their holdings, Esposito said.
"We don't really intend to tell the dealer what to do," Esposito said. "They have a lot of skin in the game in the structure. They're smart people. They're extremely entrepreneurial. Our capital is meant to be passive."
Franchise Equity Partners has completed one deal, an investment into the Taco Bell fast-food chain. Esposito said the firm plans to have a signed deal on an auto dealership investment by year end.
LaNeve, chairman of the firm's automotive unit, said Franchise Equity Partners will target stakes of 20 to 49 percent in dealerships. "We want the dealer to maintain control of the dealership," he said. "And we want them to continue to run it."
LaNeve left Ford in January. He joined Charge Enterprises in June as chief business officer and this month was named president of the company, which provides customers with engineering, design, equipment and software specifications for planning and installing charging stations.
LaNeve said he spends most of his time on Charge but is involved weekly with Franchise Equity Partners.