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what is the multiplier for franchise restuarants?

people often mention that 2-3 multiplier (times net cash flow) is adequate for resuarants. Is it also true for franchise restuarants (such as KFC, pizza hut, taco bell, etc.)? I know multiplier is just one of the valuation methods. But speaking of multiplier approach, is my statement valid?

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Answers (2)
Salvatore B. Urso
Florida Business Acquisitions, Co.
FL

Daniel,

One thing to consider is how much time commitment is required of the new owner. For instance, consider a biz w/ earning $60k and the owner works 50 hrs/week vs. one where the owner works 5 hrs per week and earns $60k. It seems logical that the former should sell for a higher multiple. When we value a business we look at cap rate vs. owner involvement. If you have more questions feel free to call me. I'll help you sort this out. No charge. 813.421-5001.

Best of luck!

Sep 5, 2009
Chuck Woolweaver
Amerivest Group
Business Broker/ Franchising Specialist
Palm Beach County, FL

Yes, the multiplier doesn't change because it's a franchise. Here in Florida, the multiplier for QSR's is 2-3

Sep 3, 2009