FRANCHISE VALUATION METHODS: DETERMINING THE RIGHT PRICE

Franchise valuation is a critical step in the franchising process, ensuring both franchisors and potential investors understand the worth of a franchise opportunity. Various methods are employed to determine the right price for a franchise. One common approach is the income-based method, where the franchise's projected cash flows and potential earnings play a central role in its valuation. Another method is the market-based approach, which assesses comparable franchise sales and their market values. Additionally, the asset-based method evaluates the franchise's tangible and intangible assets. By carefully considering these franchise valuation methods, both franchisors and investors can make informed decisions, ensuring a fair and profitable partnership.