Franchise Valuation multiples

by a searcher from INSEAD

2 years ago

Looking at a company in healthcare with 1.5m EBITDA  -  a franchise with multiple units and potential to continue to expand the number of units and revenue per unit. Is it fair to look at this deal with as a 5x multiple price or should there be a discount for being part of a franchise? say 3.5x instead of 5x?

What are typical exit multiples for a franchise operator with $1m+ in EBITDA?

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searcher

Don't forget market area is also a factor. An office in a large city should have a different multiple then one closer to a rural area.

4 months ago | like reply | 0 likes

searcher from Harvard University - Harvard Business School

Franchisees trade for lower multiples, particularly if the franchisor needs to approve new buyers. You should read this section of the FDD and get comfortable with those risks, which are specific to each franchise system and will dictate the discount to average multiples.

6 months ago | like reply | 0 likes

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