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Free Consult →What this tool does
Enter the franchise fee, buildout, equipment, opening inventory, training, professional fees and working capital, then monthly sales with cost of goods, labor and the franchise fees. The calculator returns at-the-location profit, payback period and cash-on-cash return.
How to read the result
- Payback is measured against total cash in, including the working capital that covers the build-up. Leaving the reserve out makes every deal look faster than it is.
- The franchise fees is more than royalty. Brand fund, local marketing minimums and technology charges usually add three to six points on top.
- Compare the output against the brand's own Item 19 in our library. If your model beats the filed average, ask which assumption is doing the work.
- Fixed charges do not scale down. At half the sales you assumed, the fee load as a share of revenue roughly doubles.
Questions we get asked
Where do I find realistic revenue and cost inputs?
Take it from the brand's disclosure document. Our library reads Item 19 for 431 brands, with medians, quartiles and what each filing leaves out.
What is at-the-location profit?
Profit at the location before debt service, owner distributions and any corporate overhead you have above the unit. It is the number a lender and a buyer both start from.
What payback period is normal?
It varies by category and by how much of the buildout the landlord covers. What matters more is whether the model still works at the bottom quartile of the brand's own disclosed range.
Want this handled? Averan does the bookkeeping for franchise owners and multi-unit operators.
Planning another location? Fractional CFO covers the forecast and the cash plan behind it.
What this measures
A single location earns money in one of two ways: it sells more, or it keeps more of what it sells. This calculator works out what one location earns against the money you put into it, so you can see which of those two you are actually relying on.
It produces three numbers. What the location keeps in a year, how long it takes to get your money back, and what the cash you invested returns each year once it is open.
What to put in
- Enter annual sales at that one location, not the whole business.
- Wages, including payroll taxes and the cost of covering shifts you work yourself.
- Rent and everything that comes with the building.
- Cost of the products or materials you sell.
- Enter royalty, advertising fund and technology fees at the rates in your agreement.
- The total you spent to open, including the fee, the build and the cash you funded before break-even.
How to read the answer
The payback period is the number most owners get wrong, because they count the build and forget the months of losses before the doors earned anything. Count both.
Cash-on-cash return is what the money would have earned elsewhere. Compare it to what a lender charges you, not to zero.
Across the 431 brands in the library, average sales at a location run from $17,527 to $11,521,897, with a middle figure of $748,885.
The 114 brands that publish a profit line keep a median 20.9% of sales, from 2.2% to 44.4%. The 31 whose FDD names the figure EBITDA have a median EBITDA margin of 21.8%.
Fees run a median 9.0% of sales across the 368 brands that disclose the full load.
Opening costs run from $4,250 to $8,908,000 depending on the brand and the build.
Where it usually goes wrong
- Paying yourself nothing and calling the difference profit. If you work shifts, put your wage in.
- Using the brand's average instead of your own sales. A median of 39% of locations reach their brand's average.
- Leaving the minimum fees out. Below a certain level of sales the minimum costs more than the percentage.
- Counting the franchise fee and the build but not the cash burned before break-even.
Questions this raises
- How much does it cost to open in my category?
- What does Item 19 actually tell me?
- Why did revenue rise and profit stay flat?
- Am I ready to open another one?
If the inputs are hard to find because the books are not built by location, that is the problem to fix first. Bookkeeping and controller work both start there.
If you want this done for you
What happens next
Reading about it and having it done are different things. Here is exactly what happens if you want the second one.
- The call takes thirty minutesYou describe the business and where the numbers are letting you down. We give you an expert view of your situation, and what we would start with. There is no pitch deck.
- We look at the fileYou give us read access to the books as they are. We come back with what is wrong, what it will take to fix, and whether the answer is bookkeeping, controller work, or something else.
- We send a written scope and a priceIt lists what we do each month, what you get, the date it lands and the fee. We agree it before anything starts, and it does not change unless you agree.
- We take over the books and close the first monthWe set up access and systems and enter the opening balances. The first close lands on the date in the scope, and every one after it does too.