How Savvy Franchisees Earn a Stake in the Franchisor’s Exit

Rob’s journey in franchising began in 1998, when he became a franchisee and area developer for Quiznos. Over the next several years, he opened more than 100 locations across the Metro NY Market, helping fuel Quiznos’ explosive growth. But when the franchisor experienced a liquidity event in 2006, Rob - like all other operators - received nothing for the value he helped create.

It didn’t sit right with him. In his next franchise venture, Rob decided things had to be different. He asked to be paid for what he helped develop, laying the foundation for what would become Tag‑Along Rights—a mechanism allowing operators to share in a franchisor’s success when it exits. That idea ultimately inspired the creation of Elite Franchise Capital, a model built to ensure early franchisees who help grow a brand also share in its reward when it sells.

The great Charlie Munger on the power of incentives

Every franchisor will do one of these: exit, stay private, or fade away. Most franchisors are chasing that first outcome — but there’s only one path to get there: dozens of profitable franchisees.

It’s a classic chicken-and-egg problem. Sophisticated franchisees want franchisors with traction, while emerging franchisors need capital and believers to build it. Most often franchisors get stuck at the 10-40 units stage and can’t break through past 100 units.

Elite Franchise Capital (EFC) saw this gap and asked: why not incentivize franchisees that get the franchisor exit-ready for taking the risk? So here is the structure they came up with:

A breakdown of a sample exit with the tag-along rights

Franchisees will develop a certain number of units helping the franchisor get exit-ready. When the franchisor most likely exits, the franchisees equity for the developed units (aka tag along rights) will kick in. You can see a sample breakdown above.

EFC’s role is part matchmaker, part strategic partner throughout this process. They scout promising, growth-ready franchisors and pair them with proven operators. They also invest directly into franchisees, helping with development capital, operational systems, marketing, finance, and real estate support.

Important note: unlike franchisees, EFC is able to look beyond the data in the FDD into financials directly from the franchisor. So their due diligence is a powerful vetting mechanism.

The Portfolio So Far

EFC is currently scouting their next three brands, and already has two standouts in their portfolio:

Topsail Steamer, recently featured on Shark Tank, offers ready-to-steam seafood meal kits - just add water for a clam bake at home. The brand is leaving the beach and coming to a town near you, expanding with storefronts and serving its signature home replacement meal solutions.

Topsail Steamer raised $350k from Lori Greiner and Todd Graves

Scissors & Scotch – Think “third space” meets grooming lounge. With 8–12 chairs, a membership model, and a focus on high-spend regulars, Scissors & Scotch combines operational scalability with sticky recurring revenue — much like its peer Hammer & Nails.

A look inside the Scissors & Scotch Lounge

Who they are looking for?

EFC is now looking for ambitious operators with franchise experience who are looking for their next opportunity. Request to speak with Rob here to learn more.

You can listen to our full interview with Rob Tobias, a Managing Partner of EFC here: