Franchise Consultants Chicago IL

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Tammi K. Franke
312-447-2900
550 West Van Buren St. Suite 1450
Chicago, IL
John Zihun Lee
312-360-6738
311 S WACKER DR STE 3000
CHICAGO, IL
Andrew L. Goldstein
311 S WACKER DR STE 3000
CHICAGO, IL
R. Delacy Peters Jr.
312-360-6434
311 S WACKER DR STE 3000
CHICAGO, IL
Peter Ian Mason
312-360-6505
311 S WACKER DR STE 3000
CHICAGO, IL
Terry M. Schlade
312-251-2291
1 N FRANKLIN ST STE 1200
CHICAGO, IL
Steven J. Yatvin
312-629-5192
333 W WACKER DR
CHICAGO, IL
Lee Norman Abrams
312-701-7083
71 S WACKER DR
CHICAGO, IL
Robin M. Spencer
312-258-5733
6600 Willis Tower 233 S. Wacker Drive
Chicago, IL
David Charles Gustman
312-360-6515
311 S WACKER DR STE 3000
CHICAGO, IL
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5 Keys To A Thorough Financial Analysis Of A Franchise Investment

Closely analyzing the financial numbers before investing in a franchise can help you choose the franchise which presents the best opportunity for success. An accountant or qualified financial advisor can be helpful in looking at metrics such as cash flow projections and the franchisor's financial statements. See the following article from Blue MauMau for more on this.

Franchise financial analysis
When evaluating a franchise opportunity there is typically a great deal of focus directed on the business concept, franchise contract, franchisor support and franchisee performance. Each of these areas rightfully deserve attention. However, one area that requires as much if not more focus is in the area of financial analysis. Although, the term financial analysis can conjure up visions of boring number crunching this activity is important when considering the purchase of a franchise as well as any business. Since a franchise candidate has a limited amount of capital to invest in the franchise they need to be on target when identifying capital requirements.

They should have an accountant or qualified financial advisor to assist in the process. Here are some key items that need to be a part of the financial analysis:

  1. In-depth review of the franchisor's financial statements available in the Franchise Disclosure Document.  You want to be sure that the franchisor has sufficient capital to operate the franchise.  The franchisor shouldn't be relying upon initial franchise fees for their main source of funding or earnings.
  2. Fully understand Item 7 of the FDD. It describes the estimated investment in a specific franchise.
  3. Scrutiny of the franchise financial formula. This process involves identifying and evaluating the components of the product or service sale leading to the gross margin. Sample sale price, product, labor costs, royalty and ad fees,etc. are in the formula. This is one of the most important elements of the financial analysis and may require some "digging" to get all of the necessary information.
  4. A 3-5 year Pro-forma income statement that projects sales, gross margin, expenses and earnings. One should be conservative and not aggressive when projecting. Feedback from current franchisees can provide valuable input when constructing a pro-forma.
  5. A cash flow projection for the first 3-5 years of the franchise operation. This is needed  to determine if projected sales and income will be sufficient relative to available working capital.
  6. ...

Click here to read the rest of this article from NuWire Investor

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