To assign a valuation multiple for Domino’s franchises, we leverage estimates from DealStats, a database of acquired private company transactions sourced from U.S. business brokers and SEC filings. We reviewed the larger franchise industry as well as selling price multiples for larger systems where more transaction data is available.
Under $1 Million Net Sales
- Estimated Selling Price = Net Sales * 0.31
$1 Million – $5 Million Net Sales
- Estimated Selling Price = Net Sales * 0.34
Over $5 Million Net Sales
- Estimated Selling Price = Net Sales * 0.86
When you go to sell a Domino’s franchise based on the median multiple of .34 and Average Unit Volume (AUV) in 2021 of $1,304,012, it would sell for $443,364. This is higher than the midpoint investment of $419,475.
As an owner of multiple Domino’s franchised locations, you do have the ability to make greater profit. Pizzeria owners with over $5 million in AUV have a median multiple of 0.86. If you had 5 Domino’s franchises, amounting to $5,768,865 in sales, selling your multiunit franchise system would amount to $5,802,853. This is almost thrice the estimated initial investment of $2,097,375. However, this will not always work because it might cost you more to build a franchised store in your location, its brand name recognition, and community structure. You also might have different multiples for your stores depending on revenue, volume, footfall, location, and many other factors.
That said, the more franchises you own, the more earning potential you have as private equity firms become interested in your business instead of individual owner-operators.