Alicia Miller·December 26, 2024

How to Buy Franchise Businesses, Then Sell to PE | Alicia Miller Interview

Alicia Miller is a former high-tech corporate executive who left a 20-year career after having a baby and needing to get off the road. In 2013, at age 43, she acquired a distressed portfolio of 11 Sylvan Learning tutoring franchise units from the Sylvan corporate parent in Northern Ohio and Kentucky — paying only low five figures because the portfolio was collectively unprofitable. She self-funded the acquisition and budgeted roughly $300,000 for post-close improvements: relocating and remodeling tired locations, renegotiating leases, replacing weak center directors, and reinvesting in marketing that the prior distressed owner had cut. She grew the portfolio to 12 units and then sold it in three regional chunks — unable to find a single PE buyer because Sylvan lacked PE participation at the unit level. The episode is as much a masterclass on franchise strategy as it is a personal ETA story: Alicia now consults franchisors preparing for institutional capital and works with PE firms on due diligence, and she has authored 'Big Money in Franchising,' arguing that acquisition entrepreneurs should target franchise systems where PE is already active or imminently likely so they have a clear, high-multiple exit path.

Deal facts

purchase price: low five figures (approximately $25,000–$50,000 for the portfolio)
sde ebitda: portfolio was unprofitable at acquisition; individual units should have generated ~$100k profit each
financing structure: self-funded (no SBA loan); budgeted ~$300,000 for improvements, moves, and marketing post-acquisition
notes: Acquired 11 Sylvan Learning franchise units in distress from Sylvan corporate (not a franchisee seller). Opened 1 additional new unit during ownership, reaching 12 total. Exited by breaking portfolio into 3 regional groups and finding separate buyers for each. No private equity buyer materialized.

Why this business

Alicia had a toddler at home and needed to step off the road from a 20-year high-tech corporate career. She wanted a business she could run without inventing something from scratch — 'a business in a box.' She gravitated to child education because of her personal life stage, liked that tutoring was a proven sector with durable demand, and saw that the distressed Sylvan portfolio in her geography was fixable with clear operational issues driving underperformance. She also wanted to build and sell within a five-year arc rather than start from scratch.

What's working

Acquired an unprofitable distressed portfolio at very low cost (low five figures), giving significant upside if operations could be improved
Clear diagnostic on underperformers: wrong locations, absent or poor center directors, zero marketing — all fixable issues
Revitalized at least six locations through moves, lease renegotiations, landlord tenant improvement allowances, and remodels
Swapped out underperforming front-office staff and installed more engaged center directors
Invested in marketing that the prior distressed owner had cut, which had been directly causing sales decline
Opened one new unit in a local market gap, growing portfolio from 11 to 12 units
Operated from an owner role, not a day-to-day manager role, doing strategic work from the start
Exited by breaking the portfolio into three geographic regions and finding buyers for each

What's hard

Several locations were up to three hours away from home, creating significant travel burden — contrary to the original goal of being present for family
Sylvan had no private equity presence at the unit level and likely never will, severely limiting the buyer pool and capping exit multiples
Took on underperforming units she would have been better off refusing — corporate wanted to sell the whole portfolio and she had more leverage than she realized
Could have negotiated a better purchase price by understanding how much corporate needed to exit these units
Had to sell the portfolio piecemeal in three regional chunks rather than as one clean asset to a single PE buyer
Tutoring category has key-person dependency at the center director level (sales ability required), which deters PE buyers
Should have opened her aperture to other franchise sectors earlier — home services, health, swim schools — rather than anchoring immediately on child education

Notable quotes

I knew that if I built it up and revitalized it that there would be buyers because they had consistent interest in this franchise over decades. What I didn't understand was the absence of private equity as buyers at the unit level puts a bit of a ceiling on what you can get, what you can sell these businesses for.

If I had it to do over again I would look more seriously, more closely at sectors and at franchise systems that had enough scale where you could consolidate a much bigger portfolio over time and build a much bigger, chunkier asset to then sell to a private equity firm.

I was willing to take on some of the projects, whereas if I had it to do over again I would have cherry-picked the best locations and said look, these are underperforming locations, you deal with them. I was basically taking on an unpaid job to go and turn some of these locations around.

The willingness to walk away in a negotiation is really important to maintain all the way up right to the end, even if you put a little money into escrow to keep them talking to you — being willing to leave that money on the table and walk if you can't get what you want.