Franchise Rules of Thumb — Introduction

Throughout this week we will be posting a list of almost 200 franchises with a “quick” rule of thumb, or range, usually expressed as a percentage of sales. For many of the franchises, the information is based 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 information gets published in our print guide, some of the franchises may have folded, sold or merged. We try to keep our information as up-to-date as possible. We could use your help. To contribute to our ever-growing list, just go to our online form, complete the requested information, and click “Save.” Also, if you find that a franchise has disappeared or merged, etc, please let us know by emailing tom@bbpinc.com. 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. But, they will give you a quick ballpark idea of what the business might sell for 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. Also, additional information is usually available under its own listing in The Business Reference Guide. In The Business Reference Guide, we have listed every franchise that will be listed in this week’s posts, and others where information was available, alphabetically by name within the Rules of Thumb section. In some cases, there is the Estimated Annual Sales per Unit and the Approximate Total Investment.

Remember, that rules of thumb are not intended to create a specific value or to be used for an appraisal. They supply a quick “ballpark” price range. They can provide a starting point for pricing a business or a sanity check after performing an informal valuation. Our Business Reference Guide also includes a “How to Use” section, in the front, to help you gain some insight on how to make some adjustments to make the rule of thumb a bit more accurate.

Tomorrow’s posting will include franchises from A to C.