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Franchises for sale with unit economics

Buying an existing franchise unit (a resale) gives you a proven system plus a track record at that location, which a brand new unit cannot show. You also inherit the franchise agreement, the remaining term and the franchisor's approval process. CompanyBrokers listings show revenue, SDE, asking price, multiple and reason for sale in structured form, and the franchise documents, unit financials and lease sit in a data room per listing that opens after NDA and proof of funds.

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Industry
Franchise resale
State
Texas
Asking price
$500K to $2M
SDE
$200,000+
Franchise resale
Austin, Texas
Sample listing
Revenue
$1,050,000
SDE
$238,000
Asking price
$640,000
Multiple
2.7x SDE

What buyers look for in a franchise resale

  • Unit level sales and SDE for at least three years, compared with the brand averages in the FDD
  • Years left on the franchise agreement, and the renewal terms and costs
  • Royalty and advertising fund percentages, plus technology and other recurring fees
  • Protected territory size and any nearby units, including corporate stores
  • Required remodels or equipment upgrades the franchisor has scheduled
  • Franchisor support quality, ideally confirmed by talking to other franchisees

How much is a franchise worth

Franchise resales are usually valued on a multiple of SDE for owner operated units, or EBITDA for multi unit groups with managers. As general market guidance, single units commonly trade in a range around 2 to 4 times SDE, with well known brands, long remaining terms and strong territories reaching higher. Because royalties are already an expense, a resale with the same revenue as an independent business often shows lower earnings, and buyers price that in. Required remodels, a short remaining term or falling same store sales lower the price. Get a first range with the business valuation calculator.

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Franchise due diligence checklist

  • Current Franchise Disclosure Document, especially Item 19 (financial performance), Item 20 (unit openings and closures) and Item 21 (financials)
  • The seller's franchise agreement and every amendment, plus the form you will sign at transfer
  • Transfer fee, training requirements and the franchisor's approval criteria for new owners
  • Royalty reports and franchisor statements matched to tax returns and bank deposits
  • Notices of default, compliance audits or open disputes with the franchisor
  • Lease term and whether the franchisor holds a collateral assignment of the lease
  • Remodel schedule and the estimated cost of any required updates

Financing a franchise purchase

Many established brands appear on the SBA franchise directory, which simplifies lender review for an SBA 7(a) loan; read about using an SBA loan to buy a business for typical terms. Lenders look at unit performance, the remaining franchise term and the buyer's experience. Seller financing is common and franchisors sometimes accept it as long as their approval conditions are met. Some brands also offer incentives or reduced transfer fees for qualified buyers taking over an existing unit.

Selling your franchise unit

Franchisees who want to sell my business should first read the transfer section of their agreement, including any right of first refusal the franchisor holds. Our selling a business checklist helps you prepare. Then list the unit or get matched with business brokers who handle franchise resales in your state, or search business brokers near me. See pricing for listing plans.

Is it better to buy a franchise resale or open a new unit

A resale comes with existing customers, staff and verifiable financials, so the risk is lower and cash flow starts on day one. A new unit costs less upfront in some brands but has no track record.

What is a franchise transfer fee

It is a fee the franchisor charges when a unit changes owners, covering approval and training. The amount is set in the franchise agreement and FDD, and the buyer and seller negotiate who pays it.

Can the franchisor block the sale of a franchise unit

The franchisor typically has the right to approve the buyer and sometimes a right of first refusal to buy the unit itself. Buyers need to meet financial and experience criteria and complete training.