Franchise Consultants Newark NJ

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Robert C. Brady
973-596-4617
Gibbons Pc, One Gateway Center
Newark, NJ
Melvin Greenberg
973-643-3700
1 GATEWAY CTR STE 600
NEWARK, NJ
Kingsuk Bhattacharya
973-736-9800
80 MAIN ST
WEST ORANGE, NJ
Laurence R Slous
973-744-2100
250 BELLEVUE AVE
UPPER MONTCLAIR, NJ
Eric L. Chase
17 STATE ST FL 34
NEW YORK, NY
Michael S Waters
973-565-2011
Three Gateway Center, 100 Mulberry St
Newark, NJ
Sharon T Jacobson
973-736-4600
155 Prospect Ave
West Orange, NJ
Kenneth L. Leiby
973-218-0405
159 MILLBURN AVE
MILLBURN, NJ
Terry L Trantina
973-535-1900
75 LIVINGSTON AVE PO BOX 430
ROSELAND, NJ
Dominick Joseph Bratti
732-855-6127
75 Eisenhower Pkwy Ste 200
Roseland, NJ
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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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