A franchise business in Australia is typically worth 2–4x EBITDA, or 1.5–2.5x net profit — though the multiple depends heavily on brand recognition, remaining franchise agreement term, and whether the franchisor will actually approve the buyer you’ve found. Most franchise resales in the $1M–$5M turnover range settle somewhere between $300,000 and $1.5 million. A McDonald’s franchise and a Jim’s Mowing run from a ute in the suburbs are both technically “franchises.” They have almost nothing in common from a valuation standpoint.
If you’re thinking about selling your franchise and wondering what it’s realistically worth, here’s how it works.
What Makes Valuing a Franchise Different
When you sell a normal business, the goodwill is yours. The brand, the customer relationships, the systems — you built them, you own them, and you can transfer them to whoever you want.
A franchise doesn’t work like that.
The brand belongs to the franchisor. The systems were handed to you under a licence. The goodwill you’ve built in your specific location is partly yours, but it sits inside a structure that a third party controls. That changes the valuation in three specific ways.
The agreement has an expiry date. A franchise agreement with twelve years remaining is a very different proposition from one expiring in two. Buyers price remaining term heavily — a short-remaining-term franchise can be difficult to sell at any meaningful price if the franchisor won’t guarantee renewal. A business otherwise worth $800,000 might attract $400,000 if the agreement runs out in eighteen months.
The franchisor can reject your buyer. Most franchise agreements give the franchisor right of first refusal and the power to approve or reject any incoming franchisee. This isn’t abstract fine print — it actively constrains your buyer pool. You can’t sell to just anyone who has the money.
Your marketing can be restricted. Some franchisors won’t allow you to openly advertise the resale. That limits competition for the asset and can suppress price. You’re often selling quietly — through the franchisor’s own resale channel or brokers with established relationships in the system.
None of this means your franchise is hard to sell. It means selling it requires understanding these constraints first, and working within them rather than around them.
How Franchise Valuations Are Calculated
There are three methods buyers and advisors use for Australian franchise valuations. Most experienced buyers apply at least two as a cross-check.
EBITDA multiple. The most common method. Take your earnings before interest, tax, depreciation, and amortisation — calculated after royalties and marketing levies, because those are real recurring costs, not optional ones — and apply a multiple. For most Australian franchise resales, the working number is 2–3x EBITDA. A brand with strong national recognition, clean operations, and a long remaining agreement can reach 3–4x. A struggling location with twelve months left on the agreement and a declining trend won’t reach 2x.
The rule of thumb: 2x EBITDA is the floor for a sellable franchise; 4x is premium territory, reserved for strong brands with long agreements and documented operational performance.
Revenue multiple. Less common, but used for high-margin franchises where EBITDA understates the earnings power. A well-run food or personal services franchise with stable royalty structures and tight cost control might be valued at 0.8–1.2x annual revenue. Be cautious here — this method makes anything look good if you cherry-pick the right year.
Net profit / SDE method. More appropriate for smaller owner-operated franchises where the owner is also the primary worker. You calculate Seller’s Discretionary Earnings — essentially what you make before paying yourself a market salary — and apply a multiple of 1.5–2.5x. This gives a realistic floor for what a working-owner buyer would pay.
For context on how these calculations work and which add-backs are legitimate to include, see our guide to EBITDA add-backs when selling a business.
The Factors That Move Your Number
Two franchise locations in the same system, same city, similar turnover. One sells for $600,000. The other sells for $1.1 million. Here’s what creates that gap.
Brand strength. A nationally recognised brand brings buyers. People know it, trust it, and will pay for the certainty that the customer base is already there. A newer or weaker brand forces buyers to do more work for less certainty — and they price that in.
Remaining franchise term. Twelve years of remaining agreement gives a buyer room to build and then sell again. Two years gives them almost nothing, and their bank even less to lend against. If your agreement is approaching expiry, the first conversation to have is with the franchisor about renewal — before you start thinking about price or timing.
Lease terms. If your franchise operates from a fixed location, your lease is effectively a second agreement you need to manage. Five years remaining plus two five-year options is bankable. A lease co-terminating with the franchise agreement, in eighteen months, is a red flag that sophisticated buyers will use to negotiate hard. The asset sale vs share sale structure also affects how the lease transfers to the buyer and what stamp duty may apply.
Financial performance — and its direction. Three years of stable or growing earnings is what buyers want to see. A single outlier year — great or terrible — will be interrogated. A declining trend in the past two years suppresses your multiple regardless of what the peak year looked like. Understand your normalised earnings, clean up your financials, and know your add-backs before you go to market.
Operational dependence on you personally. A franchise where you work sixty hours a week on the floor and your face is on the local marketing is worth less than one that runs through a trained manager. Buyers model what happens when you leave — and if the answer is “it doesn’t run,” that’s priced in immediately.
Your relationship with the franchisor. Some franchisors actively support resales and have clear, documented processes. Others treat resales as an opportunity to renegotiate terms, impose upgrade requirements, or slow-walk approvals for reasons that aren’t always transparent. Know where your franchisor sits before you go to market. Your advisor or broker will know the system’s history.
The Franchisor Approval Process: What Most Sellers Miss
A corporate advisor I work with told me about a deal last year — food franchise, Perth metro, solid performer, agreed price of $780,000. The seller and buyer were aligned. The broker had done the groundwork. They submitted to the franchisor for approval, and the franchisor came back with a list of upgrade conditions — store refurbishment, new equipment, staff retraining — that would cost the incoming buyer around $120,000 to complete before approval would be granted.
The buyer’s financing had been modelled without those costs. They renegotiated the price down to $660,000. The seller, who hadn’t built this into their expectations, had no leverage — those conditions were in the franchise agreement they’d signed a decade earlier (which is more than most sellers recall clearly when they’re focused on the sale price).
The lesson isn’t that franchisors are adversarial. Most aren’t. It’s that a pre-sale conversation with the franchisor about what their approval conditions will actually be — before you set a price or go to market — is essential.
Before you begin, get answers to these questions:
- Does the franchisor have right of first refusal? At what price, and on what timeline?
- What are the buyer eligibility criteria — net worth requirements, experience requirements, mandatory training?
- Are there refurbishment or upgrade obligations triggered on transfer?
- How long does the approval process typically take? Four to twelve weeks is common; some systems run longer.
- Will the franchisor extend the agreement on resale, or will the buyer simply inherit your remaining years?
The answers directly affect what your franchise is worth and how quickly you can close.
What Franchise Resales Actually Sell For in Australia
Ranges differ significantly by franchise category. These are indicative figures based on observed market activity.
| Franchise type | Typical EBITDA multiple | Notes |
|---|---|---|
| Major fast food (McDonald’s, KFC) | 3–5x | High entry cost; strong buyer competition |
| Food and café (mid-tier national brands) | 2–3.5x | Location-sensitive; lease term critical |
| Retail (Harvey Norman, Officeworks) | 2–3x | Inventory exposure; rent a key variable |
| Personal services (gyms, hair, beauty) | 1.5–2.5x | Operator-dependent; lower without a manager |
| Home and garden services (Jim’s Group, franchised cleaning) | 2–3x | Low capital; recurring revenue; more liquid market |
| B2B services (IT, consulting, HR) | 2.5–4x | Recurring contracts; less location risk |
Your tax position when selling a business in Australia — particularly the small business CGT concessions — can significantly affect your net proceeds independently of the headline sale price. A $900,000 sale with full concessions applied looks very different from the same number without them.
How to Improve Your Franchise’s Value Before Sale
Two to three years before you plan to exit is the right time to start. The practical steps:
Get the lease sorted. A landlord conversation about extending your lease — ideally securing a five-year option — makes a meaningful difference to buyer confidence and bank financing. Don’t wait until you’re in sale mode.
Talk to the franchisor about renewal. If your agreement is expiring in three to four years, discuss renewal now and document the outcome. Buyers will ask; “we’ve had a conversation and renewal is expected” is better than silence.
Present three years of clean financials. One year of clean accounts helps. Three years is much better. Engage an accountant who understands franchise-specific add-backs — royalties, marketing levies, and franchisor-mandated costs need to be properly treated.
Reduce operational dependence on yourself. Train your manager, document your systems, step back from the floor. A business that demonstrably runs without you is worth more than one where the buyers are quietly wondering what happens when you’re gone.
Understand what the buyer will ask. Know what a standard due diligence checklist looks like. The more you’ve anticipated those questions, the faster the process moves — and slower processes usually mean lower prices.
Frequently Asked Questions
How do you value a franchise business? Most Australian franchise resales are valued at 2–4x EBITDA or 1.5–2.5x net profit. Key factors are brand strength, remaining franchise agreement term, lease duration, and the financial performance of the specific location. The franchisor’s approval requirements also affect marketability and therefore price.
How much is a business worth with $1 million in sales in Australia? A franchise turning over $1 million typically generates net profit of $150,000–$300,000 depending on royalties and margins. At a 2–3x multiple, that puts the sale price at $300,000–$900,000. Industry, brand, and operating costs matter far more than turnover alone.
How much do franchise owners make in Australia? Franchise owner earnings vary widely. A McDonald’s licensee might clear $200,000–$500,000 annually; a smaller service franchise might earn $80,000–$150,000 after royalties and wages. The Franchise Council of Australia reports median franchisee turnover of around $500,000 per year.
How do I value my business in Australia? For most small businesses, the starting point is adjusted net profit (or EBITDA) multiplied by a market multiple. For franchises specifically, also account for remaining franchise agreement term and the franchisor’s sale conditions. A formal valuation from a corporate advisor gives you a defensible number for negotiations.
What is the 1% rule in business? The 1% rule isn’t a formal valuation method, but some brokers use it as a sanity check: a business shouldn’t sell for less than 1x annual revenue. For most Australian franchises, this is a floor, not a target — EBITDA-based valuations typically produce higher numbers for well-run operations.
If you’re considering selling your franchise and want to understand what it’s realistically worth — including what the franchisor’s involvement might mean for your timeline and price — get in touch with us at Miro Capital. We work with Australian business owners on complex sales, including franchise resales where the structure requires more than a standard process.
Or if you want a preliminary number to work from, start with our business valuation calculator.