What kills multiples in due diligence
Sellers often anchor on a number the franchisor sales rep mentioned at recruiting. Real buyers underwrite to the SDE shown on tax returns, not the franchisor's average. These are the four issues that drop a multiple by 0.5–1.0× in DD.
- • Lease with under 5 years remaining (and no options). Buyers won't pay for a business you can lose to a landlord.
- • Trailing 12-month revenue declining vs prior year. Even 5% decline knocks 0.3–0.5×.
- • Key-employee dependency (one GM holds the keys to operations) — buyer treats it as a turnaround.
- • Owner-add-backs that won't survive an audit (personal vehicles, family payroll, the gray-area stuff).
Why multi-unit portfolios trade higher
PE and family-office buyers pay premium multiples for 3+ unit portfolios because the operating leverage justifies a DM hire ($110K covers 3–5 units), unit-to-unit best practices are de-risked, and the deal size finally clears their minimum check size. Single units are bought by individual operators using SBA, who can't pay PE multiples.
Related guides
Long-form playbooks on the same topic, written by the RevenueLab editorial team.
Franchise vs Starting a Business: Which Pencils Better in 2026?
A side-by-side on survival rates, capital needs, cash-on-cash returns, and resale multiples — and the operator profile each path suits. With the math, not just opinions.
Read the guideFranchise ROI Benchmarks 2026: Cash-on-Cash, Payback, and Resale Multiples by Category
What good actually looks like — payback period, unlevered cash yield, SBA-levered cash-on-cash, and resale SDE multiple — for food, service, fitness, auto, and senior care franchises.
Read the guideHow Much Does a Franchise Cost in 2026? Full Breakdown by Tier (with Real Numbers)
Every line item — franchise fee, build-out, equipment, training, working capital, royalty, ad fund, reserve — across $50K, $250K, $500K, and $1M+ tiers. No marketing fluff.
Read the guideFAQ
How much is my franchise worth?
Single units typically sell for 2.0–3.5× SDE; 3+ unit portfolios at 3.0–4.5×; premium concepts with national brand recognition at 4.0–5.0×. Real estate (if owned) is valued separately at 7–9% cap rate.
What's the difference between SDE and EBITDA?
SDE includes the owner's salary (assumes one full-time owner). EBITDA is for businesses where the buyer hires a GM — and the GM salary is deducted. Sub-$2M businesses use SDE; $2M+ businesses use EBITDA. Multiples differ because the base is different.
Do I need a business broker to sell my franchise?
Below $1M valuation: optional but helpful (10–12% fee). $1M–$5M: yes — qualified buyer pool is small and DD process is complex. Above $5M: hire an M&A advisor, not a generalist broker. Franchisor's resale program is the cheapest channel but the slowest.
How long does it take to sell a franchise?
Median time on market: 8–12 months for clean deals priced to comparables. Overpriced listings sit 18–24 months. Pre-list with: 3 years clean tax returns, lease assignment letter, franchisor consent letter, and a CIM (1-page teaser + 5-page deck).
How this calculator is built
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Written by Sam Doshi and the RevenueLab editorial team. We don't sell the data feeds this tool is built on.
Sourced from primary data
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Last reviewed
June 2026. We re-check every figure on the platform on a rolling quarterly cycle.
Editorial standards
See our editorial policy and disclaimer. Results are estimates, not advice.