Is Roark Capital building a franchise bubble?

The report examines the financial health of Roark Capital, noting that despite raising billions for funds like Roark Capital Partners IV and V, the firm has returned relatively little to investors. It highlights the underperformance of the Roark Capital Partners IV fund, which had an annual return (IRR) of just 0.09% as of September 2020. The document details declining sales and store growth at Jimmy John’s and slow expansion at other portfolio brands such as Orangetheory Fitness and Miller’s Ale House. Additionally, it notes that several large institutional investors, including the Canada Pension Plan Investment Board, have exited or avoided new investments in Roark funds.

• Roark Capital has shown a significant gap between the capital raised and the capital returned to investors; between 2012 and 2018, the firm raised at least $10.5 billion, but had only returned approximately $1 billion to investors as of September 2020.
• The Roark Capital Partners IV fund, which closed at $2.5 billion in 2016, experienced a sharp decline in performance from an IRR of 7.87% in mid-2018 to just 0.09% by September 2020.
• Jimmy John’s, acquired by Roark for nearly $3 billion in 2016, has seen a steady decline in sales per store, dropping from $877,000 in 2015 to $753,000 in 2019, and a contraction in store count, with 16 fewer stores in 2019 than in 2018.
• Several other Roark portfolio companies have failed to meet growth projections: Orangetheory Fitness opened fewer than 200 studios in 2018 against a goal of 300, and Miller’s Ale House averaged only 4 new restaurants per year over five years despite claims of opening 8-10 annually.
• Major institutional investors have distanced themselves from Roark Capital; the Canada Pension Plan Investment Board (CPPIB) appears to have sold its stakes in funds IV and V, and the Teacher Retirement System of Texas was not underwriting an investment in the new Roark Capital Partners VI fund as of April 2021.

APA

Ash, J. (2021). Is Roark Capital building a franchise bubble? Private Equity Stakeholder Project. https://pestakeholder.org/wp-content/uploads/2021/06/PESP_Report_RoarkCapitalBuilding_June2021_Final.pdf

Chicago

Ash, Jordan. Is Roark Capital building a franchise bubble? Private Equity Stakeholder Project, 2021. https://pestakeholder.org/wp-content/uploads/2021/06/PESP_Report_RoarkCapitalBuilding_June2021_Final.pdf.

Wikipedia

{{cite report |last1=Ash |first1=Jordan |title=Is Roark Capital building a franchise bubble? |publisher=Private Equity Stakeholder Project |date=June 2021 |url=https://pestakeholder.org/wp-content/uploads/2021/06/PESP_Report_RoarkCapitalBuilding_June2021_Final.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{ash2021roark, author = {Ash, Jordan}, title = {{Is Roark Capital building a franchise bubble?}}, institution = {Private Equity Stakeholder Project}, year = {2021}, month = jun, url = {https://pestakeholder.org/wp-content/uploads/2021/06/PESP_Report_RoarkCapitalBuilding_June2021_Final.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }