DEFINITION of 'Franchise P/E'
The expected value of new business opportunities available to a business. The franchise approach to evaluating a company breaks down the company's observed P/E into two primary components: the P/E coming from the company's business activities (base P/E) and the franchise P/E. In this sense, the franchise P/E = observed P/E  base P/E. It is a function of the rate of return on a business opportunity (the franchise factor) relative to the size of the opportunity (the growth factor).
Franchise Factor (FF) x Growth Factor (G) = (1/k  1/ROE) x g/(kg), where:
k = cost of equity
g = growth
BREAKING DOWN 'Franchise P/E'
The major factors determining the franchise P/E are the differences between the return on the new opportunity and the cost of equity. Investors should consider the growth rate and how long growth can be sustained, as well as the feasibility of the estimates (after all, they are expectations and not reality).

Franchise Factor
The measurement of the impact on a company's priceearnings (P/E) ... 
Franchise
A type of license that a party (franchisee) acquires to allow ... 
Franchiser
A party in a franchising enterprise that ultimately owns the ... 
PriceEarnings Ratio  P/E Ratio
The PricetoEarnings Ratio or P/E ratio is a ratio for valuing ... 
Forward Price To Earnings  Forward ...
A measure of the pricetoearnings ratio (P/E) using forecasted ... 
Trailing PriceToEarnings  Trailing ...
The sum of a company's pricetoearnings, calculated by taking ...

Markets
Diamond in the Rough? U.S. Franchises in 2016 (MCD, DNKN)
Learn about U.S. franchise growth and direction for 2016 and how changes in wage standards and consumer preferences may endanger large fast food chains. 
Entrepreneurship & Small Business
When Is A Franchise The Right Investment For You?
Do you have the right mix of credit, capital and business savvy to make you an ideal candidate for buying a franchise? 
Investing
So You Wanna Buy A Franchise?
Franchises are growing more popular with entrepreneurs. Here's why and what to expect from them. 
Entrepreneurship & Small Business
Best Franchise Opportunities For 2012
These franchises have proven successful for many franchisees, and some of them are really affordable. 
Insights
The Cost of Buying a McDonald's Franchise (MCD)
Setting up a new McDonaldâ€™s franchise can cost the owner up to $2.2 million to get the restaurants up and running, but it can be very profitable 
Investing
P/E Ratio: Using The P/E Ratio
Theoretically, a stock's P/E tells us how much investors are willing to pay per dollar of earnings. For this reason it's also called the "multiple" of a stock. In other words, a P/E ratio of ... 
Investing
P/E Ratio: Conclusion
What have we learned about the P/E ratio? Although the P/E often doesn't tell us much, it can be useful to compare the P/E of one company to another in the same industry, to the market in general, ... 
Investing
P/E Ratio: What Is It?
P/E is short for the ratio of a company's share price to its pershare earnings. As the name implies, to calculate the P/E, you simply take the current stock price of a company and divide by ... 
Investing
Is Stock With a Lower P/E Always A Better Choice?
Is a stock with a lower P/E always a better investment than a stock with a higher one? The short answer is no, but it depends on a few things. 
Trading
ValuePriced Stocks to Watch in 2016 (AMBC, VIPS)
In terms of P/E and Forward P/E these stocks are trading at low valuations. Watch these technical price levels for buying opportunities in 2016.

What is the difference between forward p/e and trailing p/e?
Understand the difference between the trailing P/E ratio, which is the standard pricetoearnings calculation, and the forward ... Read Answer >> 
How can the pricetoearnings (P/E) ratio mislead investors?
A low P/E ratio doesn't automatically mean a stock is undervalued, just like a high P/E ratio doesn't necessarily mean it ... Read Answer >> 
What does the forward p/e indicate about a company?
Explore the forward price to earnings ratio and learn its significance and how it compares to the traditional price to earnings ... Read Answer >> 
What is an alternative ratio to forward p/e?
Discover the most commonly used alternative equity evaluation ratio to the forward P/E ratio, and the relative advantages ... Read Answer >> 
Where can I find the P/E ratios for the Dow and S&P 500?
When it comes to valuing stocks, the pricetoearnings (P/E) ratio is one of the oldest and most frequently used metrics. ... Read Answer >> 
What is the average pricetoearnings ratio in the banking sector?
Explore the price/earnings ratio in regard to the banking industry and learn what the average P/E ratio is for most banking ... Read Answer >>