It would depend on the timing of the remodel and what the contracted/expected remodel frequency is. Also if the remodel is tied to a renewal period of the franchise agreement and any new terms. Ultimately this is like any business that requires maintenance CapEx; it won’t show up in EBITDA, but will impact your cash flow. You could frame this like deferred CapEx and make a pro rata purchase price adjustment. As an aside, depending on the franchisor and industry, 5x on $500K seems a little rich. You might also consider the conventional wisdom of asking yourself why other franchisees in the system passed on this deal (maybe good reason, but its work asking).

Yes, if it's a scaled franchise with market comps, ultimate purchase price should reflect the comps. The outstanding franchisor required reno should be a dollar for dollar deduct from whatever the comps say. Some franchise brokers may know of deals that sold in a similar situation so you could probably narrow down that range a bit.