Business valuation guide

How to value a franchise business in Australia

Most franchise businesses in Australia sell for 1 to 3.5 times their adjusted profit, plus stock at value. Where yours sits depends on the strength of the brand, how long is left on the franchise agreement and lease, and what the franchisor will require of the next owner.

The short version

Franchises are priced on adjusted profit: net profit after royalties and marketing levies, with one working owner’s wage, depreciation, interest and one-off costs added back, multiplied by a range that reflects risk.
You are selling the right to trade under the brand for the time left on the agreement. A short remaining term or no renewal option pulls the price down.
Refurbishments the franchisor will require, transfer fees and training costs are usually taken off the price.
The franchisor must approve the buyer, so its consent is part of every sale.
Buyers compare your price with the cost of opening a new outlet in the same brand.

Typical multiples

What is a franchise business worth?

Brokers value franchises as a multiple of adjusted profit, usually PEBITDA (profit before interest, tax, depreciation and amortisation, with one working owner’s wage added back). For larger or managed outlets it is EBITDA, with a market salary for every role. The ranges below show where different kinds of franchise usually land.

Indicative multiples for Australian franchise businesses, plus stock at value
Type of franchise	Typical multiple	What puts it there
Owner-operator outlet	1.0x to 1.8x	Adjusted profit under about $120,000, the owner working full time, a smaller or regional brand, or less than five years left on the agreement.
Established outlet in a known brand	1.8x to 2.8x	Adjusted profit of about $120,000 to $350,000, a stable team, steady sales, and the agreement and lease running well beyond the sale.
Strong outlet in a leading brand	2.8x to 3.5x	A national brand with a healthy network, a manager in place, a long term with renewal options and a recent refurbishment.
Multi-unit and master franchises	Case by case	Groups of outlets, area developers and master franchise rights are valued on their own merits, often with a formal valuation.

The brand sets the ceiling, the outlet sets the price. A well-known brand widens the pool of buyers and lenders, but buyers still pay for this outlet’s provable profit, term and lease. Selling a franchise? Our franchise specialists can help.

The method

How to value a franchise in four steps

Work out adjusted profit
Start with net profit from your last full financial year, after royalties and marketing levies. Add back one working owner's wage, depreciation, interest and genuine one-off costs. The business terms glossary explains PEBITDA and add-backs.
Check the term and the lease
Count the years left on the franchise agreement and any renewal options, and check that the lease runs at least as long. Buyers pay for the time they can trade, not the time you have had.
Choose a multiple
Start from the table above, then adjust for the brand's health, how much you work in the business, staff stability, location, and the trend in sales.
Deduct what the buyer must spend
Take off required refurbishments, the transfer fee if the buyer pays it, and any training costs. Stock is usually added at cost on top.

Worked example

Food franchise, $1.4 million turnover

Owner works full time, six years left on the agreement plus a five-year option, lease aligned. The franchisor requires a refurbishment within two years. Figures are illustrative.

Worked example of a franchise valuation
Net profit after royalties and levies	$120,000
+ Owner's wage (one working owner)	$70,000
+ Depreciation	$28,000
+ Interest on equipment loan	$10,000
+ One-off equipment repairs	$7,000
Adjusted profit (PEBITDA)	$235,000
Multiple (established outlet)	1.8x to 2.4x
Value before deductions	$423,000 to $564,000
− Required refurbishment	$120,000
Indicative price range	$303,000 to $444,000
Plus stock	at settlement

Return check: at $373,500 (2.1x less the refurbishment), a buyer who steps into the owner's role keeps $165,000 a year before tax. That is a 33% return on the $493,500 they spend in total, including the refurbishment.

Valuation methods

Which valuation method suits a franchise?

For a typical owner-run franchise, a multiple of adjusted profit is the method buyers, brokers and lenders use. The others act as checks or suit larger groups.

Method	How it works	Use for a franchise
Multiple of adjusted profit	Adjusted profit × an industry multiple.	The main method for owner-run franchise outlets.
EBITDA multiple	Earnings before interest, tax, depreciation and amortisation × a multiple, with a market salary for every role.	Managed outlets and multi-unit groups.
Revenue multiple	Annual turnover × a multiple.	A rough cross-check only. Rent, wages and royalties vary too much between outlets.
Discounted cash flow	Forecast cash flows discounted back to today.	Useful when the agreement has a fixed end date, or for groups and master franchises.
Cost of a new outlet	The franchisor's fee plus fit-out and set-up for a new site in the same brand.	A ceiling check. Buyers rarely pay more for an existing outlet than a new one would cost, unless its trading history earns it.

For the general principles behind every method, see our guide on how to value a business.

Franchise terms

Franchise costs and terms buyers check

Royalties and levies are already in the accounts, so they affect value through profit. The items below can move the price on top of that, and buyers will read the franchise agreement and the franchisor’s disclosure document to find them.

Item	What buyers check	Effect on value
Remaining term and renewal	Years left on the agreement, renewal options, and the conditions for renewing.	A short term or no renewal option lowers the multiple.
Refurbishment obligations	Refits or upgrades the franchisor requires during the term or on transfer.	The expected cost usually comes off the price.
Transfer fee and costs	The franchisor's transfer or assignment fee, legal costs and the buyer's training fee.	Agreed between the parties. Whoever pays, it affects the net result.
Royalties and levies	Whether rates change on transfer or renewal, and the annual marketing fund statement.	Higher fees after the sale reduce what a buyer will pay.
Territory	Whether the territory is exclusive, and the rules on online and delivery sales.	Protected territory supports the price. Overlapping outlets weaken it.
Suppliers and rebates	Required suppliers, pricing and who keeps supplier rebates.	Affects margins and how much a new owner can improve them.
Network health	Outlets opened, closed, transferred or terminated in recent years, as shown in the disclosure document.	A growing, stable network attracts more buyers and lenders.

The franchisor’s consent is part of the sale. Under the Franchising Code of Conduct, a franchisor must not unreasonably withhold consent to a transfer. If it does not refuse in writing within 42 days of your request, or of receiving information it asked for, consent is taken as given. It can reasonably refuse if the buyer does not meet its selection criteria, or if you owe it money or are in breach. Talk to the franchisor early.

Buyer checklist

What buyers pay more for

Two outlets in the same brand with the same profit can sell for very different prices. These are the items buyers and their advisers check in due diligence, and where the multiple is won or lost.

Brand and franchisor

A recognised brand with a growing or stable network
A franchisor that supports transfers and trains new owners
Strong national marketing and a working online ordering system
A protected territory
Few disputes or closures in the network

Agreement and lease

Five or more years left on the agreement, plus renewal options
A lease that runs at least as long as the agreement
A recent refurbishment, or none due soon
No breaches, arrears or notices from the franchisor
Royalty rates that stay the same after the sale

Financials and operations

Two to three years of accounts that match the BAS and the franchisor's sales reports
Sales at or above the network average
A stable, trained team and a manager in place
Wages paid correctly under the relevant award
Equipment in good order and compliant with brand standards

More on the lease side: selling a business with a lease. On what goodwill is made of: the types of business goodwill.

Buying a franchise

Buying a franchise: pros and cons

If you are on the buying side, a franchise trades some of the freedom of an independent business for a proven system. Both sides of that trade affect what an outlet is worth to you.

Why buyers choose a franchise

A proven system. Operating manuals, store layout, products and pricing are already worked out.
Training and support. Industry experience is often not essential, because the franchisor trains you.
Brand and buying power. National marketing, supplier deals and a name customers already know.
Trading history. An existing outlet has figures you can check against the network.
Easier finance. Lenders are often more comfortable with established brands.
Shared interest. The franchisor earns more when your outlet does well.

What to weigh up

Less control. The franchisor decides products, suppliers, pricing and promotions.
Ongoing fees. Royalties and levies are paid whether or not the outlet is profitable.
Renewal is not guaranteed. Even a good operator may not be offered a new term.
Good sites cost more. Established outlets in strong locations carry a premium.
Reputation risk. Your value depends on a brand you do not control.
Selling needs approval. The franchisor must approve your buyer when you exit.

A franchise is not a guarantee of success. Research the brand, speak to current and former franchisees, and have a franchise lawyer and accountant review the agreement and disclosure document before you sign. Start with our guides to buying a business and due diligence, or browse franchise businesses for sale.

Before you sell

How to lift your franchise's value

Value comes from two things: more provable profit, and fewer surprises for the buyer. Every extra $20,000 of provable profit adds $36,000 to $56,000 to the price at typical franchise multiples, and a long term with no refurbishment due can lift the multiple itself.

Grow sales

Use every brand program. Loyalty, app and delivery channels the franchisor offers.
Run local marketing. Build on national campaigns in your own area.
Lift average spend. Train the team on upselling and add-ons.
Beat the network average. It is the first figure a buyer compares.

Protect margin

Roster to sales. Match staff hours to demand.
Control waste. Track stock and wastage against brand targets.
Review rent. Rent above market limits what any buyer can pay.
Keep clean books. Accounts that match the franchisor's sales reports.

Reduce the buyer's risk

Renew or extend the agreement before going to market.
Align the lease with the franchise term.
Complete or price the refurbishment so the buyer knows the cost.
Stay in good standing. No arrears or breaches. Our business health check covers the rest.

Common mistakes

Mistakes that cost franchise sellers

Most franchise sales that fall short do so because of something in the agreement or lease the buyer finds late. Price follows certainty.

Planning your exit? Our exit planning guide covers the timing.

Pricing on turnover. Buyers pay for profit after royalties, wages and rent.
Ignoring the remaining term. The right to trade shrinks every year it is not renewed.
Leaving the buyer to find the refurbishment. A late surprise costs more than a disclosed one.
Telling the franchisor last. Its approval process sets the timeline.
Pricing above a new outlet. Buyers compare your price with opening a new site.
Selling while in breach or arrears. It gives the franchisor grounds to refuse consent.

Know your number

Find out what your franchise is worth

Our brokers value franchises against real sales data from 27+ years of business sales, and work with franchisors on the transfer. Confidential and no obligation.

FAQs

Franchise valuation: common questions

What multiple do franchise businesses sell for?

Most franchises sell for 1 to 3.5 times adjusted profit, plus stock at value. An established outlet in a known brand usually sells for around 1.8 to 2.8 times. Small owner-operator outlets, or those with little time left on the agreement, sell at the low end.

Is a franchise worth more than an independent business?

Not automatically. The brand, systems and support reduce risk for a buyer, which can support a higher multiple. But royalties and levies reduce profit, the franchisor controls the transfer, and the right to trade ends with the agreement. A strong outlet in a leading brand often sells for more. A weak brand can sell for less.

Does the franchisor have to approve the sale?

Yes. Under the Franchising Code of Conduct, the franchisor must not unreasonably withhold consent, and if it does not refuse in writing within 42 days of your request, or of receiving information it asked for, consent is taken as given. It can reasonably refuse if the buyer does not meet its selection criteria, or if you are in breach or owe it money.

How does the remaining term affect value?

Directly. A buyer is paying for the right to trade under the brand for the time left. Five or more years plus renewal options supports a full multiple. With only a year or two left and no option, buyers and lenders treat the outlet as a short-term income stream and pay much less.

Who pays the transfer fee and refurbishment costs?

The franchise agreement sets the transfer fee, and who pays it is agreed between buyer and seller. Required refurbishments are usually priced into the sale, either by reducing the price or by the seller completing the work before settlement.

Can I value my franchise on revenue alone?

Not reliably. Two outlets with the same sales can earn very different profits once rent, wages and royalties are paid. Revenue multiples are a rough cross-check only. Buyers and lenders price franchises on adjusted profit.

What records do I need for a valuation?

Two to three years of financial statements and tax returns, recent BAS, the franchisor’s sales reports, the franchise agreement and any renewal terms, the lease, staff details, an equipment list, and any notices about refurbishments. Our brokers will give you a full list.

How long does it take to sell a franchise?

Typically 3 to 9 months from listing to settlement, plus time for the franchisor to approve and train the buyer. Outlets with a long term, an aligned lease and no refurbishment due sell faster. See how long it takes to sell a business.

Buying or selling a franchise

Keep reading

Franchise businesses for saleFranchises currently on the market.
Buying a businessHow to find, assess and buy the right business.
Due diligenceWhat to check before you commit.
Selling a business with a leaseAssigning the lease to a buyer.
Selling a business with BenchmarkHow our brokers take a business to market.

Other industries

Valuation guides by industry

Business valuations near you

Talk to a valuer who knows franchising

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This guide is general information, not financial, legal or tax advice. Every franchise is different, so speak to a broker, franchise lawyer or accountant before setting a price or signing an agreement.

Sources: ACCC, selling or transferring a franchise agreement; Franchising Code of Conduct (legislation.gov.au); Business Queensland, valuing a business to buy or sell; business.gov.au, sell your business. Checked 11 October 2026.