How do you determine the value of a franchise/small business?
I have been offered a job to work for a small business franchise (home inspections) and then have the option of being a partner after 2 yrs.
How do you determine a franchise’s value?
Do you use today’s value or the value in 2 yrs?
My concern is that my contribution will make it more valuable and thus cost me more when I have the option to buy in.
Any other suggestions along this line would be great.
Thanks.
I’m not sure how to determine the value if there are intangible assets, or how much of projected future sales you can count towards a valuation. But how about if you get the current value, and project a reasonable amount of growth forward for 2 years. Then agree to purchase a share based on either that projected valuation, or the actual valuation in 2 years, whichever is less?
That gives you a chance to buy in at a price that has a ceiling on it.
I’m not sure how to determine the value if there are intangible assets, or how much of projected future sales you can count towards a valuation. But how about if you get the current value, and project a reasonable amount of growth forward for 2 years. Then agree to purchase a share based on either that projected valuation, or the actual valuation in 2 years, whichever is less?
That gives you a chance to buy in at a price that has a ceiling on it.
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well, there are many things, like the industry or the service in particular that it is catering to.
then, its future prospects, the total capital assets; liquidity of the business, et all
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From an accounting stand point you need to calculate the companies free cash flow, that is the best determination of value.
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