Resale Offer Analyzer
Someone's selling a franchise unit — is the asking price fair? Check the implied multiple against a fair one, and see your cash-on-cash return and payback if you finance the purchase.
What this calculates
The buyer's side of a resale. Given an asking price and the unit's earnings, it derives the multiple the seller is implicitly asking for, and then — if you are financing the purchase — the cash-on-cash return and payback period you would earn at that price.
What you will need
Asking price and earnings. Use normalised earnings, adjusted for the current owner's discretionary spending and for a market wage covering whatever work you will not do yourself.
Financing terms. Deposit, rate and term. The same price produces very different returns depending on how it is funded, which is why an unfinanced comparison can mislead.
Remaining agreement and lease term. You are buying the years remaining. A short remaining term compresses the window in which you must recover your money.
How to read the result
Work back from the return rather than forward from the multiple. If the cash-on-cash return at the asking price is unattractive relative to what you could earn elsewhere at lower risk, the price is too high whatever multiple it represents — and that is a stronger negotiating position than an opinion about multiples. Check the payback period against the remaining agreement term as well: paying back after the agreement expires is not a payback at all.
Questions about this tool
What multiple should I be paying?
There is no single right multiple; it depends on transferability, remaining term, trend and owner dependence. Test the price by the return it produces for you rather than by whether the multiple sounds standard.
The seller says the price reflects potential. Should it?
You are buying current earnings and paying today. Potential you have to create yourself is not something to pay the seller for — if the upside required their work, it would already be in the numbers.
What should I verify before offering?
The earnings, against filed accounts and bank records rather than a spreadsheet; the remaining lease and agreement terms; and the franchisor's transfer conditions, including whether they will approve you at all.
For reference only; not legal, tax, or investment advice. Results depend entirely on the figures you enter — check them against your own quotes and your franchise agreement before acting on them.