Business franchising has a long history of successful business companies expanding their businesses through franchises. Generally, successful restaurants keep the food costs in the range of 27 to 32% of food sales. These percentages can be higher or lower depending upon the type of restaurant. However, to be more accurate, it’s best to compare your cost percentage with restaurants having similar menus and services.
For most of us, the word franchise” is almost synonymous with images of the bright and shiny fast food logos floating over every Main Street, USA we’ve ever driven through. While it’s true that quick-service food establishments provide excellent examples of franchise operations, that doesn’t mean the principles behind successful franchising don’t apply unless running the Fry-lator is a full-time position in your kitchen.
Estimated Initial Investment – an estimate of the total costs that the franchisee will incur when starting up their business. The calculation will include fees paid to the franchisor along with the cost of equipment, inventory, insurance and other necessary items.
This helps the franchisor to prevent a situation where the franchisee acquires knowledge, copies the franchise concept and uses this to compete with the franchisor. This can sometimes happen at the end of the franchise period. Basically, there should be restrictions imposed on the franchisee when dealing with materials or other property of the franchisor, and these should be returned and accounted for by the franchisor upon the expiry or termination of the franchise.
Represented the franchise finance group of a multinational bank as the administrative agent, lead arranger and lead lender in senior secured credit facility to support the acquisition by a private equity sponsor of one of the largest national Pizza Hut franchisee groups, with over 100 locations.