Franchise EBITDA
Also known as: Operating Cash Flow, Store-Level EBITDA, Franchise Earnings
Franchise EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is a key profitability metric for franchise locations that measures operating cash flow before non-cash expenses and financing costs. For franchisees, EBITDA represents the earnings available to service debt, reinvest in the business, and provide owner compensation. Franchise EBITDA margins typically range from 10-20% for restaurant concepts to 25-40% for service-based franchises. EBITDA is also the primary metric used to value franchise businesses for resale — most franchise locations sell for 3-5× annual EBITDA (or a multiple of Seller's Discretionary Earnings for owner-operated locations). Understanding a franchise's expected EBITDA margin is essential for calculating ROI, determining debt service coverage, and projecting exit value.
Real-World Example
A Mosquito Joe franchise with $650,000 in annual revenue and a 30% EBITDA margin generates $195,000 in EBITDA. After debt service on a $200,000 SBA loan ($28,000/year), the owner nets approximately $167,000 pre-tax. If the owner decides to sell after 5 years, the business might be valued at 3.5× EBITDA = $682,500, assuming stable or growing revenue.
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Explore FDDIQ Franchise DataLast updated: April 2026