Future Bet – Deconstructing the Franchise Roi
Listen to Holly A Ford’s Segment on Pillars of Franchising 11/28/18
Among the Key Performance Indicators when determining if a business is a good investment is the critical ROI.
Franchise Return on investment (franchise ROI) is a financial ratio used to calculate the benefit an investor will receive in relation to their investment cost. It is a percentage that is most commonly measured as franchise Earnings (net income) – franchise Cost (the original cost of the investment) divided by franchise Cost.
Franchise ROI = (Earnings-Cost)/Cost
Franchise ROI should never be overlooked when buying a business. Determine what your goals are and assess business opportunities to find the best ones to meet your goals. For example, Fred and Ray decide to buy a franchise resale from Zarian Firm. They are looking to be in the business for just 4 years and would like an franchise ROI of 40% to buy a new Batmobile. They have 200,000 to invest. Ray and Fred need a business that has a net profit of $70,000 a year to achieve their goal. Can they do it? Stay tuned.
Listen to my segment on Pillars of Franchising 11/28/18 to learn more.