To assign a valuation multiple for Little Caesars’ 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.
When you go to sell a Little Caesars franchise based on the median multiple of .59 and 2021 AUV of $940,000, it would sell for $554,600. This is significantly lower than the midpoint investment of $1,037,000.
However, as an owner of multiple Little Caesars franchised locations, you do have the ability to minimize loss. Pizzeria owners with over $5 million in sales have a median multiple of 0.86. So, if you had 10 Little Caesars’ franchises, amounting to $9,400,000 in sales, selling your multiunit franchise system would amount to $8,084,000. This is also not going to recover your initial investment of $10,370,000. This might be a big reason for the decline of Little Caesars’ franchised locations – it just isn’t viable anymore.
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.