Franchise Glossary
EBITDA
What is EBITDA in franchising?
Earnings Before Interest, Taxes, Depreciation, and Amortization. In franchising, it is the standard way to measure a location's core operating profitability: what the business earns from day-to-day operations, stripped of financing choices and accounting adjustments. EBITDA is also how franchise resale prices are determined: buyers and brokers typically value a franchise at a multiple of its EBITDA, often 2x to 5x for most systems and higher for premium brands. If you plan to eventually sell your franchise, understanding EBITDA is essential.