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Help with Jimmy Johns valuation!?

As a broker I have several JImmy Johns locations for sale. I am about to bring a 5x earnings offer to my seller. His accountant keeps telling him Jimmy Johns should be going for 7-10x earnings. I strongly disagree with this and I am attempting to find other professional opinions. Has anyone dealt with one of these before? Multiplier it actually sold for? Business reference guide 2014 says 65-70% of gross revenue. ANY HELP is strongly appreciated. Thanks!

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Answers (3)
Marlon Gray
E-Biz Exchange
Bergen County, NJ

Ben, that multiple is insane! Out of curiosity, what are the gross sales and net income? The rule of thumb on this franchise is 1.5-2x sellers discretionary earnings, 3 to 5x EBIT, or 2-4x EBITDA. I specialize in hospitality and depending on location and rent (and how it relates to market value and term remaining) the valuation will be in those ranges.

Nov 5, 2014
Michael Givner
Transworld Business Advisors
Morris County, NJ
Premium Broker

Well said Don! I agree.

Nov 4, 2014
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The BAF Group LLC

There is no way in the world you are going to get a Jimmy John's at the multiples the accountant is quoting. Your seller should take the 5X and run! Regardless of the brand, it is still a sandwich shop. Franchise brands normally sell for 10 to 15% above a non-branded operation with similar revenue and net profits.

Nov 4, 2014