Business valuation mandate in the context of the valuation of a network of fast-food franchises
Evaluation mandate to determine the economic value of a franchisee operating several establishments of an American brand established in France
Mandate description
Mandate ofbusiness valuation conducted on behalf of a French franchisee operating between five and ten establishments Of a International fast food brand.
The mission aimed to determine the economic and financial value of the operating perimeter, taking into account characteristics specific to the franchise model : contractual structure, royalties, recurring investments and brand dependence.
The aim was to provide a independent analysis intended to inform the manager's strategic discussions with his financial partners.
Key issues
One of the main challenges was to understand the real drivers of profitability in a sector with limited margins and highly standardized.
The analysis had to include both operational factors (turnover by point of sale, royalty rate, payroll, rents) and the strategic factors (remaining duration of franchise contracts, brand dependence, renewal potential).
In financial terms, the evaluation was based on updated flow methods (DCF) And of sectoral comparisons.
Les Multiples observed in franchised fast food restaurants were generally between 6x and 9x EBITDA, depending on the number of points of sale, of the income stability And of Level of debt.
Finally, the mission should also take into account the franchisee's financing capacity And of the investment structure specific to the franchise model (goodwill, commercial leases, supply contracts).
Approach and results
The approach was based on predictive modeling of consolidated performances of the various establishments, the Replenishment of normalized cash flows And the separation of effects related to the brand and the franchisee's own management.
Specific work has been carried out on the economic value of the retail portfolio, distinguishing between mature sites Of recent units.
The results of the analysis made it possible to determine an economic value range consistent with market standards, and to provide the customer with a structured discussion base for its exchanges with investors and banking institutions
The transactions shown include those completed by, or with the involvement of, Hectelion team members in current or previous professional roles. They are presented for illustrative purposes only and do not imply exclusive responsibility by Hectelion.
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The transactions presented were carried out by, with the contribution of, or with the participation of members of the Hectelion team in the context of functions performed currently or previously.