[Edaily Marketin Song Seung-Hyeon Reporter] As the artisanal burger franchise Frank Burger begins its search for a new owner, another asset has been added to the hamburger mergers and acquisitions (M&A) market. Multiple potential buyers, including Genesis BBQ Group—the operator of the chicken franchise BBQ—are considering an acquisition. Unlike Mom’s Touch and Burger King, whose valuations are estimated at around 1 trillion won, Frank Burger is valued in the tens of billions of won, leading analysts to believe that potential buyers who find large-scale deals burdensome are looking at it as an alternative.

According to investment banking (IB) industry sources on the 13th, it is reported that multiple companies, including the BBQ Group, are considering an acquisition as the sale of a controlling stake in Frank F&B—the operator of Frank Burger—is reportedly under review. Founder and Chairman Shim Woo-chang’s side selected Samil PwC as the lead advisor in the second half of this year and has begun the sale process.

Frank Burger operates approximately 600 stores nationwide. Last year, its earnings before interest, taxes, depreciation, and amortization (EBITDA) stood at around 10 billion won, while its net debt was 33.5 billion won. The market estimates the value of a 100% stake in Frank F&B to be around 40 billion won. The enterprise value (EV), including net debt, is approximately 73.5 billion won, representing an EV/EBITDA multiple of about 7x. This is lower than the 10x multiple expected by the sellers of Mom’s Touch.

BBQ Group has been consistently seeking to enter the hamburger market. As of the end of last year, its cash and cash equivalents totaled approximately 150 billion won. Last year’s consolidated revenue was 527.8 billion won, up 4.3% from the previous year, but operating profit fell 19.4% to 69 billion won. Yoon Hong-geun, Chairman of the BBQ Group, has set a goal of opening 50,000 franchise locations worldwide by 2030. This move is interpreted as an effort to diversify the business structure—which has been heavily focused on chicken—and secure a brand to support overseas expansion. A plan to acquire the company in partnership with financial investors (FIs) has also been discussed. The BBQ Group is also being mentioned as a potential candidate to acquire Mom’s Touch and Burger King.

A key variable is the litigation over franchise markups. Franchise markups refer to the distribution margin that the franchisor retains when supplying raw and auxiliary materials to franchisees. Frank Burger is currently facing at least two lawsuits filed by franchisees seeking the return of these markups. If the company loses the cases, it may have to refund several million to tens of millions of won per store; given the number of locations, the total amount to be returned could reach several billion won. This is a factor that potential buyers will inevitably have to factor into their valuation of the equity stake.

Mom’s Touch, owned by KLN Partners (KLN), completed its preliminary bidding process earlier this month. Citi Global Markets Securities, the lead underwriter for the sale, plans to narrow down the shortlist, conduct due diligence, and accept final bids in November. Mom’s Touch’s EBITDA last year was 103.1 billion won, and the sellers are expecting a valuation of around 1 trillion won, based on an EV/EBITDA multiple of 10. It is reported that a major domestic retail strategic investor (SI) also expressed interest during the preliminary due diligence phase.

Affinity Equity Partners is planning to sell BKR, the operator of Burger King, by the end of the year. Unlike the Mom’s Touch deal, this will proceed through individual negotiations with a single buyer rather than a competitive bidding process. Following Deutsche Securities, Lazard Korea has been selected as a co-lead manager, and the firm is seeking a buyer primarily among overseas F&B and consumer goods strategic investors (SIs). BKR’s EBITDA last year was 106 billion won, similar to Mom’s Touch, and its valuation is estimated to be up to 1 trillion won. The BBQ Group is also being mentioned as a potential buyer for both properties.

However, previous transactions involving restaurant franchises were finalized at prices that fell short of sellers’ expectations. Last month, Bain Capital acquired Gongcha for approximately 900 billion won—about one-third of the 2.7 trillion won initially discussed at the start of the sale. VIG Partners also sold the chicken franchise Bonchon to Thailand’s Minor Group. While large-scale deals valued at around 1 trillion won continue to be subject to a tug-of-war over pricing, Frank Burger—with an enterprise value (EV) in the 70 billion won range—is viewed as an asset that mid-sized strategic investors (SIs) or financial investors (FIs) can approach with relatively little financial burden. With both large and small-to-medium-sized burger chain deals set to hit the market simultaneously by year-end, potential buyers appear to have a wider range of options.