Educational only — not investment, legal, tax, or financial advice. Benchmarks cited are FDD Item 19 medians (2024–2025 filings), SBA Franchise Directory data, FRANdata, and IBBA Market Pulse small-business resale data. Individual unit performance varies widely. Always validate against current franchisees in your specific DMA.
Every franchise sales deck quotes a different metric. AUV. Royalty rate. "Average owner income" (calculated however they want). Across hundreds of FDDs, only four numbers actually matter — and they're the ones brokers don't put on the front page.
Here are the 2026 benchmarks for what "good" looks like, by category, on the four metrics that determine whether a franchise is actually a good investment.
The four benchmarks that matter
- Payback period — years to recover the total project cost from owner cash flow. Best concepts: 2–3 years.
- Unlevered cash yield — owner cash flow ÷ total project cost. Best concepts: 20–30%.
- SBA-levered cash-on-cash — owner cash flow ÷ equity check (after debt service). Best concepts: 30–60%.
- Resale SDE multiple — what a mature unit sells for as a multiple of Seller's Discretionary Earnings. Best concepts: 2.5–3.5×.
Plug your specific candidate into the Franchise ROI Calculator to compute all four against the brand's FDD. Below is what good looks like by category.
Service franchises (cleaning, lawn, pest, handyman)
- Payback: 2–3 years (best in the industry)
- Unlevered cash yield: 20–28%
- SBA-levered cash-on-cash: 40–65%
- Resale multiple: 2.0–2.8× SDE (recurring contracts are valuable)
- Why they win: No real estate, low CapEx, recurring revenue, owner margin 20–25%.
- The catch: Lower revenue ceiling per territory ($300K–$1M AUV). Multi-territory to scale.
Examples: Lawn Doctor, Mosquito Joe, Two Maids, ServiceMaster Clean. Best risk-adjusted return in the franchise universe at the sub-$200K project tier.
Senior care (in-home care, non-medical)
- Payback: 3–4 years
- Unlevered cash yield: 12–18%
- SBA-levered cash-on-cash: 30–50%
- Resale multiple: 2.5–3.2× SDE (recurring private-pay revenue)
- Why they win: Demographic tailwind, high AUV from small office, semi-absentee-friendly.
- The catch: Caregiver recruitment is the operational bottleneck; Medicaid-heavy markets underperform.
Examples: Right at Home, Visiting Angels, BrightStar Care. Best category for semi-absentee owners with $150–250K cash.
Fitness (boutique studio, gym)
- Payback: 3–4 years (Anytime Fitness), 4–5 years (Orangetheory)
- Unlevered cash yield: 12–22%
- SBA-levered cash-on-cash: 25–45%
- Resale multiple: 2.0–2.8× SDE
- Why they win: Recurring membership revenue, low daily owner hours, scalable team.
- The catch: Trend-sensitive (Pilates is hot, HIIT cooling), saturated in major metros.
Examples: Anytime Fitness, Orangetheory, Stretch Zone. Anytime is the most forgiving model; Orangetheory has the highest revenue but highest CapEx.
Fast-casual food (sub, smoothie, cookies, coffee)
- Payback: 3–4 years
- Unlevered cash yield: 8–15%
- SBA-levered cash-on-cash: 20–40%
- Resale multiple: 1.8–2.5× SDE (declining as concept ages)
- Why people pick them: Recognizable brands, proven playbook, exciting AUV ($1–2M per unit).
- The catch: Prime cost (food + labor) of 60–65% leaves thin margin; royalty + ad fund + rent compress further.
Examples: Jersey Mike's, Tropical Smoothie, Crumbl, Dunkin'. Higher absolute cash flow ($120–250K) but lower yield on capital than service. Multi-unit is where the wealth creation happens.
Auto services (tire, oil, repair)
- Payback: 3–4 years
- Unlevered cash yield: 11–16%
- SBA-levered cash-on-cash: 25–40%
- Resale multiple: 2.5–3.2× SDE (real estate often included)
- Why they win: Recurring service intervals, B2B fleet contracts, real-estate upside.
- The catch: Technician hiring is brutal; CapEx is high; you need to know cars or hire a manager who does.
Examples: Christian Brothers Automotive, Big O Tires, Midas. Christian Brothers is the standout — high AUV, high margin, semi-absentee-friendly via GM model.
Quick-service food (full menu, drive-thru)
- Payback: 4–6 years
- Unlevered cash yield: 7–12%
- SBA-levered cash-on-cash: 18–35% (often real estate sale-leaseback)
- Resale multiple: 2.5–3.5× SDE (highest in food)
- Why they win: High AUV ($1.5–4M), proven brand, real-estate value.
- The catch: Massive capital requirement, slow payback, strict franchisor approval (McDonald's especially).
Examples: McDonald's, Dunkin', Chick-fil-A (operator model, not really a franchise for purchase). This is asset-class investing, not job replacement.
Education & kids (tutoring, early childhood)
- Payback: 3–6 years
- Unlevered cash yield: 12–25% (Kumon high, Primrose low)
- SBA-levered cash-on-cash: 30–50% (Kumon), 15–25% (Primrose)
- Resale multiple: 2.5–3.5× SDE
- Why they win: Recurring revenue, low churn, parents pay reliably.
- The catch: Local enrollment-dependent; Primrose is $1.5–2.5M project (real CapEx); regulatory complexity.
Examples: Kumon, Mathnasium, Primrose Schools. Kumon is the highest-yield kids franchise. Primrose is asset-class real estate with a franchise on top.
What good actually looks like (the cheat sheet)
- Payback under 3 years = exceptional. Under 4 = good. Over 5 = mediocre.
- Unlevered cash yield above 20% = exceptional. 12–20% = good. Under 10% = barely above SP500.
- SBA-levered cash-on-cash above 40% = exceptional. 25–40% = good. Under 20% = the leverage isn't worth the risk.
- Resale multiple above 3× = exceptional brand. 2.5–3× = solid. Under 2× = stuck operator.
The DSCR floor every franchise must clear
SBA lenders require a 1.25× Debt Service Coverage Ratio on year-1 projections. That means your projected year-1 owner cash flow must exceed 1.25× your annual SBA loan payment. If the unit doesn't clear 1.25× DSCR at realistic (not FDD-median) AUV, the loan won't fund — and that's a signal the unit economics are too tight.
Use the Franchise ROI Calculator to model your scenario — it shows payback, unlevered yield, levered cash-on-cash, and DSCR side-by-side. Compare against the benchmarks above before signing.
Two things franchisors don't quote and you should always ask
- EBITDA (not "owner cash flow"): Item 19 reports revenue and sometimes "owner cash flow" — but they often exclude rent for owned real estate, owner labor, and royalty. Ask for EBITDA after all costs.
- Resale data: Ask the franchisor for the average sale price of franchised units transferred in the last 24 months, and the SDE multiple those sales represented. If they can't or won't provide it, that's a yellow flag.