It’s hard to believe that I could not find another site mentioning the return on investment a franchisee gets when selling the business.
A business built on sound principles and quality service and generating solid margins of over 15% has real value. The person buying the business can jump in and start getting paid immediately.
A general rule of thumb is a business is worth about 2.5 -3 times the owner’s compensation. If you sell the franchise when your compensation is $200,000, then the company may be worth $500,000 or more! That’s a heck of an excellent ROI.
Consider the alternative. If you stay at your current employer, they most likely will take you to Chuckie Cheese for lunch.
Most franchisees don’t consider selling their business until they have been doing it for a long time and are getting burnt out. The error in procrastinating for the eventual sell date can add a year or two, maximizing your company’s value. Accountants will review your P&L statements for at least the previous three years. Each year showing growth and high margins are the perfect time to sell.
I own a painting and handyman franchise, and I ask my franchisee to keep working on their list of top prospects in their territory. They would be proud to show a list of 15-20 excellent prospects to a prospective buyer. That’s how you get tremendous ROI on your franchise.