It's distressing to hear Owner/Operators talk about cash
flow as a way to value their stores. Certainly that's a
starting pint but there are at least a dozen other major
factors that determine your eventual sale price.
Back in the good old days a wise Owner/Operator would
look at each of their stores as a separate business. Today
it's become acceptable to feed cash into a quarter or a
third of your stores just to keep them open so McDonald's
can collect their rental income.
But when analyzing your equity position one needs to break
out each store as a separate business and balance the stores
carrying negative equity against the value of your better stores.
Woe to the Operator who looks at their annual cash flow,
applies a ratio to that number, and goes forward thinking
this might be the sale price of their stores.