1851

When it comes to franchise valuation, the list of things that need to be taken into consideration seems endless. There are multiple factors that play a role in determining how much an individual unit is worth&#8212; from revenue models and a company&#8217;s actual concept to intangible data like a brand&#8217;s ability to innovate, franchisees and franchisors are constantly considering new ways to determine the value of their different locations. However, valuing a restaurant franchise requires its own unique list of considerations. These are the three key factors restauranteurs need to consider to measure their store&#8217;s value: Profits &amp; Losses The most essential piece of information when valuing a restaurant franchise is its profit and loss statement. A restaurant&#8217;s track record of either bringing in consistent revenue or failing to break even determines how much its worth. Bill Wilfong, vice president of franchise growth for <a href="https://pitapitusa.com/franchise/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=three-keys-to-consider-when-it-comes-to-restaurant-franchise-valuation-4486" target="_blank" rel="nofollow" target="_blank">Pita Pit</a>, says a franchise&#8217;s profits and losses are the first place the health-conscious brand looks when valuing a location. &#8220;We keep it really simple,&#8221; said Wilfong. &#8220;The rule of thumb we use is that if a restaurant is making money and has a reasonable profit and loss statement, you can get as much as 50 cents for every dollar on sales. That number then starts to drop depending on how well a restaurant is performing.&#8221; It&#8217;s also crucial for franchisors to think long term when it comes to valuing a restaurant franchise. Restauranteurs should take the amount of time it will take for a new owner to generate economic benefits or see a return on their investment into consideration. Potential For Growth A restaurant franchise&#8217;s value also depends on whether or not it&#8217;s positioned for future expansion. That means looking at the unit&#8217;s physical location, demographics in the area and whether or not the community will provide enough customers to support a successful franchise. &#8220;We need to make sure that our franchisees will be able to make money,&#8221; said Michael Morales, chief financial officer for <a href="http://www.mooyahfranchise.com/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=three-keys-to-consider-when-it-comes-to-restaurant-franchise-valuation-4486" target="_blank" rel="nofollow" target="_blank">MOOYAH Burgers, Fries &amp; Shakes</a>. &#8220;That means looking at everything from competition in the area to average household size and income.&#8221; Things like a franchise&#8217;s visibility and how accessible it is for potential consumers also play a major role in a restaurant&#8217;s bottom line. Brands need to be aware of what its target audience is looking for, and value locations based on whether or not that criteria is met. &#8220;At its core, <a href="http://pitapitusa.1851franchise.com/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=three-keys-to-consider-when-it-comes-to-restaurant-franchise-valuation-4486" target="_blank" rel="nofollow" target="_blank">Pita Pit</a> is a lunch concept. That means we&#8217;re doing 60 or 70 percent of our business between 11am and 2pm,&#8221; said Wilfong. &#8220;Our restaurants that are in areas where plenty of people are working within a mile of their doors are going to be valued higher because of their strong potential for business.&#8221; Franchise Model It seems basic, but a brand&#8217;s franchise model determines its overall value. Franchising requirements that involve new imaging or even rebranding can sometimes cost more money than they&#8217;re worth, depending on the unit. Different models also perform better in certain markets or with a specific group of people than others, altering a franchise&#8217;s overall worth. It&#8217;s important for franchisors to keep these costs and preferences in mind when valuing a restaurant because ultimately, a franchisor is only as strong as its units. Brands aren&#8217;t able to expand their business if their individual franchises aren&#8217;t performing well. &#8220;If our franchisees aren&#8217;t successful, we aren&#8217;t either. At the end of the day our ability to grow as a brand comes down to how well our individual restaurants are doing,&#8221; said Morales. &#8220;Everything we do at <a href="http://mooyah.1851franchise.com/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=three-keys-to-consider-when-it-comes-to-restaurant-franchise-valuation-4486" target="_blank" rel="nofollow" target="_blank">MOOYAH Burgers, Fries &amp; Shakes</a> is to ensure that our franchisees are making money. That&#8217;s what helps us increase our value.&#8221;

1851 Franchise

Profit and loss statements, growth potential and franchise models all play a role in determining a restaurant franchise’s value.

This brand page has been paid for by 1851. Content within this page that is paid will showcase a Sponsored icon. This means the brand has engaged 1851 FRANCHISE to write the content. Content without the Sponsored Icon is aggregated media placements the brand earned. Questions can be sent to editorial@1851franchise.com

Three Keys To Consider When It Comes to Restaurant Franchise Valuation   

three-keys-to-consider-when-it-comes-to-restaurant-franchise-valuation

Sola Salons

Sola Salons Eyes Southern Connecticut for Strategic Franchise Expansion

sola-salons-eyes-southern-connecticut-for-strategic-franchise-expansion

Woodhouse Spas

Photo of exterior of Woodhouse Spa location with people walking around outside

Woodhouse Spas: A Recession-Resistant Franchise Opportunity With Unmatched Support

woodhouse-spas-recession-resistant-franchise-opportunity

Sylvan Learning

Pasadena Weekly: Sylvan Learning Pasadena Offers Free Tutoring for Students Impacted by Local Fires

sylvan-learning-pasadena-free-tutoring-fire-support

BIGGBY COFFEE

BIGGBY® COFFEE Names Erin Kaylor as President, Reinforcing People-First Vision

BIGGBY® COFFEE Names Erin Kaylor as President, Reinforcing People-First Vision and Growth-Focused Future

biggby-coffee-names-erin-kaylor-president

Workout Anytime

Design with Workout Anytime logo and photo of Larry Brayman

Workout Anytime Welcomes Larry Brayman as Chief Marketing Officer, Strengthening Leadership Team Amid Growth Surge

workout-anytime-larry-brayman-cmo

Buying a Franchise Masterclass

 Franchise Opportunities

Get Support Buying a Franchise

How to Buy a Franchise White Paper

How to Buy a Franchise

How to Sell Franchises

How to Grow a Franchise

Find a Franchise Supplier

1851 Franchise Opportunities

Franchisor News

Franchisor Power Rankings

FranCamp Mastermind Summit

Franchise Resources

What ALEC-Laffer's Report Means for Franchising

Website Awards

Power Rankings

About 1851

Advertise on 1851

Contact 1851 Editorial

Terms of Use

1851 Login

GROWTH CLUB LOGIN

facebook

instagram

twitter

linkedin

youtube

The Future of Franchising: Trends and Predictions for 2025 and Beyond

the-future-of-franchising-trends-and-predictions-for-2025-and-beyond

Restaurant Business: Crumbl Cools Its Expansion, Refocuses on Profitability

restaurant-business-crumbl-cools-its-expansion-refocuses-on-profitability

Franchise Face-Lifts: Why Major Restaurant Brands Are Betting Big on Remodels

franchise-face-lifts-why-major-restaurant-brands-are-betting-big-on-remodels

How New Tariffs Are Causing Price Hikes and Surcharges for U.S. Businesses and Franchises - 1851

Tariffs Prompt Price Hikes, Surcharges as Businesses (and Franchises) Brace for Rising Costs 

tariffs-prompt-price-hikes-surcharges

Pizza Hut - EYM Group - Chapter 11 Bankruptcy - 77 Pizza Hut Locations Sold - 1851 Franchise

77 Pizza Hut Locations Sold After Franchisee Bankruptcy Filing

pizza-hut-franchisee-bankruptcy-eym-group

Layoffs Surge to Pandemic-Era Highs, Opening Doors for Franchise Growth

layoffs-surge-to-pandemic-era-highs-opening-doors-for-franchise-growth

&pizza - Fast-Casual Pizza Chain Begins Franchising - 1851 Franchise

&pizza Embraces Franchising To Fuel Bold New Growth Strategy

andpizza-franchising-ceo-mike-burns

Franchisee spotlight image with Randy and Sandy Craft, Children's Lighthouse logo on blue background

The Crafts’ Successful Journey from New Parents to Children’s Lighthouse Franchisees

the-crafts-successful-journey-from-new-parents-to-childrens-lighthouse-franchisees

Franchise Success Stories: Inspiring Tales from the Front Lines

franchise-success-stories

Image of building outline hovering over person's hand

How To Choose the Right Franchise: A Step-by-Step Guide to Success

how-to-choose-the-right-franchise-step-by-step

Most Profitable Restaurant Franchises To Own in 2025 - 1851 Franchise

The Most Profitable Restaurant Franchises to Own in 2025

most-profitable-restaurant-franchises-to-own

Amateur Bodybuilder and Business Partner Bring Passion for Fitness to World Gym Franchise in Fulton, New York

amateur-bodybuilder-and-business-partner-bring-passion-for-fitness-to-world-gym-franchise-in-fulton-new-york

DonutNV Franchise Costs, Fees, Profit and Data for 2025

franchise-deep-dive-donutnv-franchise-costs-fees-profit-and-data

Three Keys To Consider When It Comes to Restaurant Franchise Valuation

MORE STORIES LIKE THIS