A franchise unit is worth what its ongoing profit can support, after the royalty, marketing levy and a fair wage for whoever runs it, adjusted for risk. Time left on the franchise agreement and the lease, the cost of any required refit, and whether the franchisor will approve a buyer can all move the value up or down.
What is the short answer?
Your franchise is worth what its ongoing profit can support, adjusted for the risk that profit will not continue. For a franchise, that profit is what is left after every franchisor fee and a fair wage for whoever runs the unit.
The brand helps, but a buyer is really buying your unit's right to trade under it for the time left, at your site, on your lease.
Three things matter most:
- Profit after fees: royalties, the marketing levy, technology fees and any required supplier pricing all come out first.
- Time left: how long the franchise agreement and the lease still run, and whether they can be renewed.
- Transfer: whether the franchisor will approve a buyer, and on what conditions.
What pushes the value of a franchise up or down?
Anything that makes the unit's profit more reliable, or gives a buyer longer to earn it, tends to push value up. Anything that shortens that time or adds cost tends to push it down.
| Factor | Tends to support value | Tends to reduce value |
|---|---|---|
| Agreement term | Many years left, with a renewal option | Little time left, or renewal unclear |
| Lease | Long term, rent the unit can carry | Short term, high rent, or no option to renew |
| Refit | Recently done, or not due for years | A required refit is due soon |
| Owner's role | A manager runs the unit day to day | The owner works full time on the floor |
| Sales trend | Steady or rising, with a clear reason | Falling, or propped up by a one-off |
| Territory | Protected area with room to grow | New units opening nearby |
| Franchisor | Stable system with clear transfer rules | Disputes, system changes or unclear consent terms |
Agreement and lease term. A buyer can only earn profit while they can trade. Short time left on either document shortens that window. A renewal option helps only if its conditions are realistic.
Owner working in the business. Many franchise units are run by the owner. If you work long hours unpaid, the profit looks higher than a buyer will see. A valuer deducts a fair wage for that work.
Refits and equipment. Franchisors often require refits on a set cycle. A refit due soon is a cost the buyer will carry.
Which add-backs and traps matter in a franchise?
Add-backs are costs added back to profit because a new owner would not pay them. In a franchise, the main traps are the costs a new owner definitely would pay.
- Owner wages. Your own pay is replaced with what it would cost to employ a manager for the hours you work. Family members on the payroll are checked the same way.
- Franchisor fees. Royalties and levies stay in. If the franchisor plans to change them, a buyer will ask.
- Transfer costs. Your agreement may set a transfer or assignment fee, training costs for the buyer and other conditions.
- Stock. Stock is usually counted at the handover date. Old or slow stock is worth less than its cost.
- Equipment. Equipment the franchisor requires to be replaced soon is a coming cost, not a hidden asset.
- One-off costs. A genuine one-off, such as opening costs or a repair after a flood, can be added back with records.
- Franchisor support. Rebates, launch support or rent relief that will stop are not ongoing profit.
What documents matter for valuing a franchise?
Beyond two or three years of financial statements and tax returns, a valuer needs the documents that set the unit's rights and costs.
- The franchise agreement and any variations or renewal letters.
- The disclosure document you received, and the current one if it has changed.
- The lease, any options and any rent reviews.
- Royalty and levy statements from the franchisor.
- Point-of-sale or sales reports from the franchisor's system.
- Payroll records and rosters, including your own hours.
- Any refit notice or capital spending plan from the franchisor.
- Correspondence about transfer or consent.
How can two similar franchise units be worth different amounts?
This example is made up. It shows how the same brand can lead to different values.
Two units of the same food franchise report similar profit. Unit A has a long lease at a rent it can carry, several years left on its agreement and a refit done recently. A manager runs it.
Unit B's owner works six days a week unpaid. Its agreement ends soon, the lease has no option to renew and a refit is due. Once a manager's wage and the refit are allowed for, Unit B's real profit is lower. A buyer also has less time to earn it.
On paper they look alike. Unit A is likely worth more because its profit is more reliable and lasts longer.
Does the franchisor have to approve a sale?
Usually yes. The ACCC's guide to selling or transferring a franchise agreement says the franchisee must ask for the franchisor's consent in writing. It also says the franchisee may have to pay an assignment fee. Your lawyer can explain how your agreement applies.
Consent does not set the value, but it shapes who can buy. A valuer will ask about it.
Which Valuo report fits my franchise?
Choose by who will read the report. For your own planning, the Business Value Report fits. If a buyer, lender, investor or partner will rely on it, choose the Professional Valuation Report.
Business Value Report. A streamlined assessment for your own decisions, such as deciding whether to renew or sell. A valuer reviews it before it is issued. It is not signed and is not for lenders, buyers or other third parties. Fees start from $995 + GST.
Professional Valuation Report. A full independent valuation, with adjustments explained and a report signed by the valuer responsible. It suits a sale, a purchase, a lender or a partner arrangement. Fees start from $1,495 + GST.
If you own several units with combined revenue of $2 million to under $5 million, the Professional Valuation Report fee is $2,995 + GST. Every fee is fixed by revenue and confirmed in writing before you pay. Businesses with revenue of $10 million or more receive a fixed fee quoted before any work starts.
If a restructure or a transfer between related parties is involved, Oliver Group scopes that work.
Get your figure
- See your fee in two taps: Get your fixed fee.
- Compare both reports and every revenue band: pricing.
- The general guide: how much is my business worth.
- Getting ready to list: valuing a business to sell.
Questions
Is my franchise worth what I paid the franchisor for it?
Not necessarily. The franchise fee and fit-out you paid are history. Value looks forward, at the profit the unit can keep making and the time left to make it under the agreement and lease.
Does the franchisor have to approve the sale of my franchise?
Usually yes. The ACCC explains that a franchisee must ask for the franchisor's consent to sell in writing. Your agreement sets the conditions, so ask your lawyer to check it before you market the business.
Why would two units in the same franchise be worth different amounts?
The brand is shared, but each unit has its own lease, rent, location, staff, sales trend and time left on its agreement. Those differences change how much profit a buyer can expect and how risky it is.
Does a required refit lower the value of my franchise?
It can. If the agreement or the franchisor requires a refit soon, a buyer will expect to pay for it. A valuer looks at the timing and expected cost and allows for it.
Can the franchisor's own valuation or resale price list tell me what my unit is worth?
It can be a useful reference, but it is not an independent valuation of your unit. A valuer checks your own figures, fees, lease and agreement terms and explains how they lead to a value.
General educational information, not advice. Examples are hypothetical and do not value a real business. The right treatment depends on the purpose, the evidence and the agreed scope.