Business plan evaluation
Posted: Sun Jan 19, 2025 8:11 am
Information about the price of a franchise is available in the franchise proposal, presentation or catalog. Sometimes it is presented as a price range. The franchisor often has different rates of lump sum fees depending on the region where the franchise business is planned to be launched, and the final cost may be different amounts. It is recommended to rely on the total investment required to open, as this includes the lump sum fee.
Make sure that the franchisor includes all payments in the plan: royalties, marketing fees and others stipulated in the contract.
Make sure that the franchise does not provide for any hidden payments. By analyzing the draft commercial concession agreement, you can find out this information. Make sure that all payments correspond to the financial plan provided by the franchisor at the beginning.
Studying the roadmap is the doctor data package first step in choosing a franchise business. It should include data on the entire investment volume and a detailed description of revenue and expenses. It is best to discuss the document in detail with the franchisor.
Business plan evaluation
Make sure you have not missed anything when accounting for costs. Opening a branch involves more than just renting premises, carrying out repairs, purchasing equipment, and stockpiling inventory. When planning start-up costs, it is important to consider the marketing budget, the payroll fund for personnel before opening the company, the security rent payment, electronic signatures, and licenses.
Determine what measures can be taken to improve the financial model indicators and how you can influence them. Find out what values were used to form the financial model: were average indicators for the entire network used or data from the most successful enterprise.
Using averages across the entire network is a fair and objective approach to creating a business plan. It confirms that the stated results are achievable and that a new franchisee can achieve the same result or improve upon it.
Assess how the startup investment will be used and consider whether these costs are realistic and in line with current equipment prices. The business plan may become irrelevant due to sharp fluctuations in the exchange rate, the application of sanctions, etc. Information should be updated and verified regularly.
It is important to have a detailed discussion with the franchisor about each figure, find out the sources and methods of its calculation, as well as what it consists of. Based on the competence and accuracy of the answers provided, conclusions can be drawn about the viability of the business model.
The financial plan cannot be the same for opening stores, for example, in Moscow and Pervouralsk, since the cost structure will be different.
When interviewing a franchisor, make sure that they factor in the cost of a capital cushion into their plan. Some businesses only start to make a profit after a few months of operation. During this time, the franchisee may face financial problems. What amounts are needed to offset costs and ensure the sustainability of the business until the required volume of customers is reached? This is what the “safety cushion” is for. For example, in retail, it plays an important role in ensuring the necessary inventory, since initial purchases are often insufficient.
Make sure that the franchisor includes all payments in the plan: royalties, marketing fees and others stipulated in the contract.
Make sure that the franchise does not provide for any hidden payments. By analyzing the draft commercial concession agreement, you can find out this information. Make sure that all payments correspond to the financial plan provided by the franchisor at the beginning.
Studying the roadmap is the doctor data package first step in choosing a franchise business. It should include data on the entire investment volume and a detailed description of revenue and expenses. It is best to discuss the document in detail with the franchisor.
Business plan evaluation
Make sure you have not missed anything when accounting for costs. Opening a branch involves more than just renting premises, carrying out repairs, purchasing equipment, and stockpiling inventory. When planning start-up costs, it is important to consider the marketing budget, the payroll fund for personnel before opening the company, the security rent payment, electronic signatures, and licenses.
Determine what measures can be taken to improve the financial model indicators and how you can influence them. Find out what values were used to form the financial model: were average indicators for the entire network used or data from the most successful enterprise.
Using averages across the entire network is a fair and objective approach to creating a business plan. It confirms that the stated results are achievable and that a new franchisee can achieve the same result or improve upon it.
Assess how the startup investment will be used and consider whether these costs are realistic and in line with current equipment prices. The business plan may become irrelevant due to sharp fluctuations in the exchange rate, the application of sanctions, etc. Information should be updated and verified regularly.
It is important to have a detailed discussion with the franchisor about each figure, find out the sources and methods of its calculation, as well as what it consists of. Based on the competence and accuracy of the answers provided, conclusions can be drawn about the viability of the business model.
The financial plan cannot be the same for opening stores, for example, in Moscow and Pervouralsk, since the cost structure will be different.
When interviewing a franchisor, make sure that they factor in the cost of a capital cushion into their plan. Some businesses only start to make a profit after a few months of operation. During this time, the franchisee may face financial problems. What amounts are needed to offset costs and ensure the sustainability of the business until the required volume of customers is reached? This is what the “safety cushion” is for. For example, in retail, it plays an important role in ensuring the necessary inventory, since initial purchases are often insufficient.