Entrepreneurs looking to launch a new franchise concept should keep their final goal at the front of their minds. If the eventual intention is to sell the franchise, it’s essential to start planning for that from the very beginning. Entrepreneur.com offered the following advice on “reverse engineering” the ultimate goal.
1. Figure Out the Earnings Needed to Reach Your Final Sale Price – After deciding the amount and the date of the eventual sale, franchise valuation comes into play. A price/earnings ratio is the usual method of valuation since it considers numerous company and industry factors, but it’s also helpful to look at the selling prices and price/earnings ratios of similar businesses. Then, simply dividing the desired selling price into an estimated price/earnings ratio can provide the earnings required to reach the final goal.