The World’s Largest Fast-Food Franchisee Is Still Hungry For More

For the past decade, Greg Flynn has been America’s largest franchisee, and now he is the largest in the world. But he a voracious appetite for more.

“The dream here is to create a global business with operating capabilities and success beyond what the world is seeing,” says Flynn, the 62-year-old CEO and founder of Flynn Group and Flynn Properties. “Operating businesses, especially consumer-facing ones, is really hard. If you can do it well consistently, over multiple brands and multiple geographies and multiple industries, that is a valuable and defensible thing to do.”

Over the past three decades, he has doubled down on fast food franchises again and again. With $5 billion in annual revenue from more than 3,000 franchises of Applebee’s, Taco Bell, Panera, Arby's, Pizza Hut, Wendy’s and now Planet Fitness in 44 states as well as Australia and New Zealand, Flynn’s portfolio is more than double the size of the next biggest franchisee.

Forbes estimates Flynn has about 25% ownership with some $2.5 billion in loans and over $100 million in cash on hand. At a valuation Forbes estimates of $5 billion, that means Flynn is worth an estimated $650 million. (Flynn declined to comment.)

“We intentionally composed the portfolio to mirror the composition of the restaurant industry. The reason is we don't have a crystal ball,” says Flynn. “I can't tell you that fast casual or quick service or anyone's segment is going to be dominant forever. In my experience over 35 years, they come and go. So if we're playing a truly long game and we want to give the people what they want, when they want it, we need to be in all of those.”

Flynn’s commercial real estate development firm Flynn Properties has also owned and managed more than 4 million square feet since its founding in 1994 with the help of various partners. That portfolio now includes 101 hotels—mostly Marriott Residence Inns and Hilton Garden Inns which make Flynn a substantial Marriott and Hilton franchisee. There are also six independent luxury properties: Esperanza and Chileno Bay, both located in Los Cabos, Mexico, the Carneros Resort and Solage, both located in the Napa Valley, the Hotel Madeline in Telluride, and the Huntington Hotel in San Francisco.

His balance sheet is also strong. Forbes estimates that Flynn has about $500 million in annual EBITDA profit, or margins of about 10% annually. Depending on ingredient costs and market conditions that impact consumer spending, margins can hit 15%.

“Within the restaurant industry, Greg Flynn and Flynn Group are viewed as the best operators,” says Gregory Francfort, managing director and senior restaurant analyst at New York City based Guggenheim Partners. “The fact that when he buys assets from franchisors or other franchisees and the operations immediately improve, it just goes to show you how strong of an operator he is.”

Back in 2001 Flynn had a deal on the line to acquire 62 additional Applebee’s locations for $162 million (including $114 million in debt) and he brought on Goldman Sachs, which invested $40 million. The bank exited in 2005 and then reinvested in 2011 before its final exit in 2014 (Had Goldman left its 2001 investment in place until Flynn’s last equity recapitalization in 2019, the firm would have realized a net 40-times return). That stake was swapped out for another investor—Ontario Teachers' Pension Plan Board—which invested $300 million for a 50% stake. Today the franchise holding company is owned in roughly equal thirds by Flynn and his management team, the pension fund and San Francisco-based private equity firm Main Post Partners.

Flynn says his succession plan is set around his senior leadership team. “I could get hit by bus tomorrow and we wouldn't miss a beat,” says Flynn. Flynn’s three children are not involved in the business, he adds.

“My kids aren't interested, but they're also not invited,” Flynn says. “I'm not particularly a believer in family business. It's very hard to recruit the absolute top-tier talent in the world to work in a family business if their name's not on the door.”

Don’t expect Flynn Group to get acquired or go public anytime soon: “It's a wonderful thing to have a substantial private business and I'd be very loath to give it up,” he says. “There may come a time when those other conditions are met and it'll make sense for us to go public, but as of right now, no plans.”

Flynn grew up north of San Francisco in the small Marin County town of Ross within a family that had been in the fast-food franchising business for years. His uncle Gary opened a successful McDonald’s franchise in the 1970s, and, his father, Donald, a tax lawyer who was not to be outdone by his brother, later acquired two Burger Kings in San Francisco. Flynn recalls that those two drive-thrus had enough cash-flow to fund his father’s retirement of international travel and even a villa on the Greek island of Corfu. One of the restaurants generated $2.5 million in annual sales and, as Flynn recalls, "That one restaurant paid for the rest of his life.”

He had a passion for history from an early age and ended up studying the subject at Brown University, where he was elected to Phi Beta Kappa during his junior year and graduated magna cum laude. Before earning an MBA from Stanford’s Graduate School of Business, he got a master’s in American History from Yale University, where he focused on the Gilded Age and wrote his thesis on 19th century steel and iron steamship entrepreneur John Roach.

The lesson he learned from Roach—who ultimately had to dissolve his business after the U.S. government never paid him for three ships he built for the Navy—stuck with Flynn as he raised his first real estate fund in 1994 and then started his own restaurant franchising when he purchased eight locations of Applebee’s in 1999 for $14 million (borrowing $12.8 million) after cold-calling the owner.

He says Roach’s mistake has continued to haunt him over the past three decades: “It taught me about concentrated risk,” says Flynn. “I've always been very wary of putting all your eggs in one basket. I've always been very mindful of pursuing a risk-adjusted strategy that was likely to pay off well by hitting consistent singles and doubles and allowing the power of compounding to kick in versus swinging for the fence.”

Flynn’s first luxury hotel, Esperanza, was purchased in Cabo San Lucas, Mexico in 2006, and as the global credit crunch hit in 2008, franchises were selling on the cheap. Flynn went on a buying spree, acquiring 296 more Applebee’s by 2012 across a handful of deals.

Then in 2013 Flynn expanded into his second concept, Taco Bell, through a deal where he acquired 76 locations and became the third-largest Taco Bell franchisee.

Then came deals for 47 Panera cafes in 2015 and then 368 locations of Arby’s in 2018.

“We built a lot of this business through acquisition and our default is always to hire the operators in place and give them a shot first,” says Flynn. “Almost without exception, I can tell you we've been able to get more out of those same operators than they were delivering for the last guys. It's because we believe they can do it and we put them in a position to do it.”

Flynn’s real estate business grew alongside the restaurants for years, with Flynn successfully closing 30 different funds. He sold his commercial office real estate portfolio in San Francisco in 2019—lucky timing right before the pandemic forced workers to stay at home and businesses reconsidered their office leases.

The rest of Flynn’s businesses survived the pandemic as shelter-in-place orders crushed in-person visits to restaurants. Flynn’s franchises focused on drive-thru sales and take-out orders through food delivery apps, and he again doubled down on investing in fast food when he acquired 900 locations of Pizza Hut and 190 locations of Wendy’s in 2021.

In 2023 Flynn then became the largest Pizza Hut operator in Australia as well as the country’s master franchisee and then expanded into the largest Wendy’s operator in Australia and New Zealand.

The scale of the operations have helped Flynn Group and it’s also given him a taste for new challenges. Last year, he invested in his first coffee franchise, the fast-growing Arkansas-based 7-Brew, and committed to developing 160 locations.

Flynn also acquired its first Planet Fitness gym. In February, he purchased 98 additional locations, for a total of more than 140 gym franchises. He’s now one of the largest franchisees in the system.

Planet Fitness is a smart way to diversify. According to Moody’s credit rating of Flynn, Planet Fitness is a higher margin franchise, compared to Flynn’s restaurants, and as the largest high-volume, low-price fitness chain in America, Planet Fitness will increase Flynn’s profits and cash flow.

“We've leaned very heavily into it,” says Flynn. “Hopefully we'll be buying more.”

The rest of Flynn’s restaurants aren’t going anywhere. He owns some of the most recognizable fast food brands in the world, and that has helped as the industry has navigated higher ingredient costs and pressure on consumer spending. Flynn’s portfolio has been dealing with mixed results among its brands, according to Moody’s: Applebee’s (460 restaurants owned), Arby’s (358 owned) and Taco Bell (307 owned) have been growing and are largely offsetting declines at Pizza Hut (1,027 owned) and Wendy’s (317 owned) locations. Moody’s still expects “sales growth, when coupled with productivity and cost containment actions, to drive profit growth.”

“We have a big footprint in six brands and our main job is to keep those running well. That's our priority,” says Flynn. “Confidence has been at an all-time low and that's intimately connected to inflation. Consumers are more value-conscious than they've ever been. The brands that are doing well are the ones who are executing well on value.”