Franchise Equity Partners made a $70 million, minority investment in Georgica Auto Holdings last October, the year-old firm's third investment and its first in an auto franchise. In December, New York-based Georgica Auto bought three dealerships from Weeks Automotive Group in Danbury, Connecticut, increasing its holdings to 26 dealerships across the Northeast.
Jon Sobel, CEO of Georgica Auto, said he expects to make more acquisitions deploying Franchise Equity Group's capital as owners of dealerships across the country age out of the business. "The individual that we bought out, Josh Weeks, is a classic example—been in the business for 40 years, had built this thing from almost nothing and reached the point where he wanted to do something different in his life," Sobel said.
"He did not have a broker. He only went to potential buyers that he thought had business philosophies" similar to his, "and he knew could afford it. So he went to a handful of buyers and selected us."
The Weeks Automotive acquisition adds Audi, Porsche and Volkswagen dealerships to Georgica's holdings, which also include Honda, Chrysler, Jeep, General Motors, Toyota and Subaru brands among others.
Franchise Equity Partners opened its doors in October 2021, and made two investments in the quick-service restaurant space: one in Pacific Bells, the Taco Bell franchisee owned by Tom Cook; and the second in Fresh Dining Concepts, the largest Focus Brands franchisee owned by Kevin Bush. Georgica Auto Holdings is its first investment in auto franchises.
"We founded Franchise Equity Partners for a circumstance just like this, which is Jon is a best-in-class operator within his sector who has the operational expertise and the intellectual capital to continue to grow," said Scott Romanoff, co-managing partner at Franchise Equity and referring to Sobel. "Making a minority asset permanent investment in his consolidated enterprises to fund a strategic acquisition is the exact way we want to deploy our capital."
Romanoff and Mike Esposito, co-managing partner, share backgrounds at Goldman Sachs. "The automotive sector in some ways shares a lot of characteristics in the QSR space," Romanoff said. "By investing in dealers and franchisees, you have the opportunity to pair yourself with not only top tier entrepreneurs, but those representing iconic brands, and the businesses tend to be incredibly stable, with very attractive cash on cash returns, and incremental growth on top. While again the businesses might be different, the theme holds."
Sobel said the Weeks acquisition was "turnkey," so "it was operational on day one. So we will be looking for other transactions that fit us. We have a two-pronged strategy. One is looking for groups that are in geographies we like with good brands and have critical mass, and the other type of opportunity we look for are tuck-ins," or places where they have perhaps two stores and can add a handful more.