How much could a popular restaurant franchise sell for?

razzamatazza: How much could a popular restaurant franchise sell for?
Completely random question. Say someone opened up a restaurant that became popular and turned it into a franchise with several restaurants. As they were growing they caught the interest of a big corporation, maybe a competitor who wanted to control the competition, or anything. If this franchise had a lot of money making potential, does anyone have ANY clue a ballpark of what a big corporation would be willing to pay for the franchise? Please no complete BS answers.

Answers and Views:

Answer by Stanley
i would say look to see if there are any similar business that are trading publicly.

example here: jack in the box:
https://finance.yahoo.com/lookup?s=jbx

find the “p/e”, this is the market value of the company divided by the earnings. in the case of jbx, it’s 12.03. multiply this number by the earnings of your company, so if you make $ 1 million per year, the value would be about $ 12 million. of course JBX is just a sample, you’d need to look at lots of restaurants and find the ones that are the most similar to yours, probably in the area of growth potential and margins.

also a word of note, is that when competitors want to buy out a company, they often pay more then current market value in order to entice the owners into selling, but when the owners want to sell the company, they often sell for less.