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We are indebted to Business Brokerage Press for the following article and information. Business Brokerage Press is the most respected and authoritative source of small business pricing guidelines available.  They may be reached at http://www.bbpinc.com.

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From the October newsletter of Business Brokerage Press:

From the upcoming 2013 Business Reference Guide, we have listed franchises with a “quick” rule of thumb, or range, usually expressed as a percentage of sales. For many of them we have based it on quite a few actual sales; others may have been based on just a few; and, in some cases, just one where we felt it was appropriate. They can be a good starting point for pricing the business.

Many of the franchises are well known while others are very new with just several units. By the time this goes to press, some of the franchises may have folded, sold or merged. We try to keep this as up-to-date as possible. We could use your help. To contribute to our ever-growing list, just complete the franchise resale form on our web site. Please also email tom@bbpinc.com if you find that a franchise has disappeared or merged, etc. Obviously the big changes such as Mail Boxes to UPS Store will be caught by us or by our researchers (hopefully).

Keep in mind that rules of thumb are just that. Every business is different and rules of thumb will never take the place of a business valuation or even an opinion of value. Rules of thumb are also not intended to create a specific value or to be used for an appraisal. But, they will give you a quick ballpark idea of what the business might sell for with everything else being equal. A rule of thumb will tell you whether a seller is in the ballpark when he or she tells you what they think their business is worth or what they want to sell it for.

For up-to-date information and for those companies where the number of units is not shown, track down their web site. Read the footnotes where indicated.

FRANCHISE LIST – A thru C:

A number in parentheses beside a franchise indicates a note at the end of the list.

Ace Cash Express 1.25

Ace Hardware stores (1) 45%

Adam and Eve 35%

Andy on Call 25%

Aero Colours 70%

All Tune & Lube 20 – 25%

AlphaGraphics 60 – 65%

Allegra Printing 60 – 65%

American Poolplayers Association (APA) (2) 140%

Andy OnCall 25%

Arctic Circle 40%

Atlanta Bread Company 25 – 30%

Baskin-Robbins Ice Cream 45 — 50%

Batteries Plus 30 – 35%

Beef O’Brady’s 22%

Ben & Jerry’s 35 – 40%

Between Rounds Bagel Deli & Bakery (3) 40 – 45%

Big Apple Bagels 35 – 40%

Big City Burrito 55 – 60%

Big O Tires  – 35%

Black Jack Pizza 45 — 50%

Blimpies 45 — 50%

Boba Loca 30%

Bresler’s Ice Cream 35 – 40%

Bruster’s Ice Cream 50%

Budget Blinds (4) 45 – 50%

Burger King 40%

Camille’s Sidewalk Café 30 – 35%

Carl’s Jr 40 – 50%

Cartridge World 30 — 35%

Carvel Ice Cream/Restaurants 55%

Car X Auto Service 35 – 40%

CertaPro Painters 45%

Chester’s International 45%

Cheeburger Cheeburger 35 — 40%

Chick-Fil-A 60 – 70%

Closets by Design 50%

Closet Factory 50%

Cold Stone Creamery 30%

Conroy’s Flowers 55 – 60%

Cost Cutter’s Family Hair 55 – 60%

Coverall Cleaning Systems (5) 2–3 times mo. sales

Culligan Dealerships 80 – 120%

Curves for Women (6) 35 — 40%

(1) Sales seem to indicate that smaller sales bring a higher multiple (50% +) than stores with sales over a million, which seem to bring lower multiples. Price is plus inventory which may be the cause of lower multiples for larger stores.

(2) $1,000 to $1,800 per team in sales; selling price – $2,000 to $2,500 per team

(3) 3 – 4 times earnings

(4) 2 times annual EBIT, plus inventory & equipment

(5) Master/Area developer – Sell for 3 to 5 times earnings plus some blue sky for size and potential of market (some cases).

(6) Prices for Curves for Woman seem to be all over the place. Some sales have been reported at 75+% of sales. One sale reported was 1.31 times sales for four units.

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FRANCHISE LIST – D thru L:

A number in parentheses indicates a note at the end of the list.

Dairy Queen 45 — 50%

Deck the Walls 35 – 40%

Del Taco 90%

Dick’s Wings and Grill 35%

Dollar Discount Stores 20%

Domino’s Pizza 50 – 55%

Dream Dinners 45%

Dr. Vinyl 75%

Dry Cleaners USA 55%

Dunkin’ Donuts (7) 75 – 80%

Eagle Transmission Shops (8) 40%

Environment Control 42%

Fantastic Sam’s (9) 35 – 40%%

Fast Fix (Jewelry) 80 – 85%

Fast Frame 32%

FasTrac Kids 45%

Fast Signs 42 – 46%

FedEx Ground 65 – 70 %

Firestone Tire Stores 35%

Floppy’s Mouse Club 70%

Foot Solutions 60%

Framing & Art Centers 60%

Friendly Computers 30% — 35%%

Friendly’s Restaurant 40%

Geeks on Call (Australia) 60%

General Nutrition Centers 40%

Godfather’s Pizza 28%

Goin’ Postal 30 – 35%

Goodyear Store (Business Opportunity) 35%

Grease Monkey 50%

Great Clips 1 – 1.5 SDE

Great Harvest Bread Co. (10)

Great Steak 50– 55%

Grout Doctor 85 — 90

Hallmark Cards 40%

Harley-Davidson Motors (11) 87%

Heavenly Hams 30 — 35%

Home Helpers 35%

Home Team Inspection 35%

Honest 1 Auto Care 70 %

House Doctor 24%

Hungry Howie’s Pizza & Subs 35%

Huntington Learning Center 60%

i9 Sports 65 – 70%

Iceberg Drive Inn 40 – 45%

Jani-King 26-5 — 30%

Jersey Mike’s Subs 50%

Jiffy Lube 50%

Jimmy Johns 65 — 70%

Johnny Rockets 75%

Jon Smith Subs 20%

Juice It Up 24%

Kentucky Fried Chicken (KFC) 30 – 35%

Kuman Math & Reading Centers 80 – 90%

Kwik Kopy (printing) 50 – 60%

Lady of America 45 — 50%

Laptop Xchange 85 — 90%

Lenny’s Subs 15%

Liberty Tax Service 40%

Lil’ Dino’s Subs (12) 64%

Little Caesar’s Pizza 55%

Logan Farms (honey-glazed hams) 30%

(7) Dunkin Donuts shops now sell for 75 – 125% of annual sales, depending mainly on geography. It’s about 125% in New England, 100% of sales in the Mid-Atlantic States, and lower in the South and Midwest. There really is not a Dunkin Donut market in the West. A sale in Colorado was reported that sold for 22% of sales.

(8) Eagle is a Texas based franchise http://www.eagletransmission.com. They are the strongest transmission franchise in the Dallas area with 21 locations and are a minor player in Houston and Austin. The attraction is the royalties at 4% in Dallas and 6% Houston and Austin, and the training is “hands on” locally.

(9) These stores sell for maximum 2 times SDE versus $120,000 to $150,000 + for new. 10 to 12 sales have been reported at 2 times SDE for absentee owner stores (most are) and 2 times SDE + manager’s salary of owner operated.

(10) 3.3 – 3.4 times SDC

(11) Netted $2,100,000 and seller retained 20% of ownership

(12) One sold for 80% of sales, but it was located in an office building with vending rights.

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FRANCHISE LIST – M thru Z:

A number in parentheses indicates a note at the end of the list.

MAACO Auto Paint 40%

MaggieMoo’s Ice Cream (13) 32%

Maid Brigade 45%

Mama Fu’s 30%

Marble Slab Creamery 45 — 50%

Martinizing 60%

McGruff’s Safe Kids ID System 52%

Meinke Car Care Center 30 – 35%

Merry Maids 45%

Midas Muffler 35 – 40%

Minuteman Press 65%

Molly Maid 40%

Money Mailer 40 – 45%

Mountain Mike’s Pizza 27%

Moto Photo 72%

Mr. Gatti’s Pizza 25 – 30%

Mr. Jim’s Pizza 35 – 40 %

Mr. Payroll 1.3%

Mr. Rooter Plumbing (14)

Mrs. Fields Cookies 68%

Murphy’s Deli 50%

Music Go Around 40 %

My Favorite Muffin 30 — 35%

Nathan’s Famous 100%

Nature’s Way Café 45%

Natural Chicken Grill 25 – 30%

New York Pizzeria 35 — 40%

Obee’s Soup/Salad/Subs 55 — 60%

Oil X Change 30%

Once Upon A Child 25%

Orange Julius 32%

Original Italian Pie 35 — 40%

OXXO Dry Cleaners 65%

Pak Mail 50%

Panera Bread 35 – 40%

Papa Johns PIzza (18)

Papa Murphy’s Pizza 35 – 40%

Parcel Plus 25%

Petland 57%

Pillar to Post – Home Inspection 40%

Pizza by George 50%

Pizza Factory (15) 35%

Pizza Inn 47%

Planet Beach 35 — 40%

Play It Again Sports 40 — 45%

Precision Tune Auto Care 36%

Pump It Up 30%

Purrfect Auto 50 – 55%

Quaker State Lube 50%

Quizno’s Classic Subs (16) 25 — 30%

Red Robin Gourmet Burgers 32%

Reniassance Executive Forums 75%

Rocky Mountain Chocolate 65 – 70%

Rita’s – Ices, Cones, Shakes 80 – 1.3%

Roly Poly Sandwiches 34%

Safe Ship 40%

Samurai Sam’s Teriyaki Grill 50%

Sarpino’s Pizza 50%

Sears Carpet & Upholstery Care 30%

Senior Helpers 40 – 45%

ServiceMaster Clean 55 – 60 %

Serv Pro 90%

Shell Rapid Lube (Business Opportunity) 50%

Signarama 55 – 60%

Sir Speedy (printing) (17) 55 – 60

Smart Box 48%

Smoothie King 40 – 45%

Snap Fitness 40%

Soup Man (Original) 30%

Subway (18) 65 – 70 %

SuperCoups 40 – 45%

Superior Inspection 1.3%

Swisher (restroom hygiene service) 75%

Taco John’s 31%

Tan USA 60 – 65%

TCBY 40 – 45%

The Maids 40 – 45%

Togo’s Eatery 60 – 65%

Topz Healthy Burgers 40%

Tropical Smoothie Café 55 — 60%

Two Men and a Truck 43%

U Save (auto rental) (18) 10 – 15%

UPS Stores 40 – 45%

Valpak Mailers 3 SDE

Valvoline Instant Oil Change 50%

We the People 86%

Wild Birds Unlimited 30 – 35%

Wine Kitz (Canada) 55%

Wingstop Restaurants 33%

Wireless Toyz 45 — 50%

Worldwide Express 50 – 55%

Your Office USA 60%

You’ve Got Maids 60%

Ziebart International (auto services) 42%

Zoo Health Club 20%

(13) One MaggieMoo’s Ice Cream & Treatery sale was reported at 92%, three years old, great location, growth at 15% approx a year; but only 15% down payment

(14) 1 – 4 times SDC plus hard assets. The number between 1 – 4 depends on several factors such as the owner operating a truck, etc.

(15) Pizza factory has approximately140 units in the 10 Western States.

(16) Two sales in the Western states were reported at 99% of sales and another at 65% of sales. However, two sales in the lower Midwest were reported at 38% and 40%. One sale in New York was reported at 48% of annual sales, another in Massachusetts at 51% and one in Nevada at 45%.

(17) One sale was reported at 70% of sales.

(18) “As a former multi-unit Subway franchisee and a Development Agent, now a business broker Subway stores, there are many different formulas I have seen. 30 to 40 weeks sales, or 60 to 70% of sales is a popular one. Actual sales price depends on supply and demand and is closer to 70% of sales in So. CA.”

“On stores with gross sales of $300,000 to $500,000, multiple of 40% of annual sales. On stores with sales of $500,000+, multiple of 50% of annual sales. Franchisor would like 30% as a down payment on resales.”

“I would suggest for Subway, in New England and maybe all of New England, due to the high number of pizza restaurants, Subways tend to sell for a much lower of percentage of sales than 47% — sometimes as low as 20 – 25%.”

(19) Price does not include cost of vehicles, and revenues do not include auto sales.

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William Bruce is a business broker and appraiser who subscribes to the Business Brokerage Press publications.  He consults nationally on issues involved in business transfers and valuation.  He may be reached at WilliamBruceOnline@gmail.com or (251) 990-5934.  His business brokerage website may be viewed at www.WilliamBruce.net.