FR.MARAPR13.PG088.pdf
Issues|Finance
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trends? What are the average results for key performance indicators (KPIs) like sales, wages, rent, overheads and gross profit?
Assessing individual business
Once you’ve decided on a franchise group, assessing the profitability of an individual business or site is the next crucial step.
How much profit is enough?
This is a very personal decision but an important consideration for every aspiring franchisee. Before embarking on buying a franchise take the time to clarify your personal and financial goals. This will create a framework for your investment decisions.
CASe Study
“We recently had a client, let’s call him John, with $300,000 to invest in a franchise. John felt a business that could deliver a 20 percent return-on-investment (ROI) was an excellent investment. However John, like many aspiring franchisees, hasn’t factored in the risk as well as personal investment of time and resources required to run a franchise business. We recommend John work to an ROI of 25-30 percent, plus factor into the business projections a salary to compensate for the time he will invest in running the business. “I’m often very blunt with clients who are considering buying a franchise. If they’re buying a franchise to achieve a better lifestyle – to be their own boss, spend more time with the family, work three days a week – my advice is to think again,” says Titman. Running your own business always consumes more time than you expect. A franchisee who fails to factor into their
A business’s profitability is also crucial to your exit plan. If you decide to sell the franchise, it’s sale value will depend significantly on how much profit the business has achieved and what it can produce in the future 88| FRANCHISING mAR/ApR 2013
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