In addition to the corporate structure there is also the implementation and controls of financial growth to the business that being, the re-occurring revenue income streams for the business which requires monitoring and auditing, establishing constant and continuous growth through the Operational Team.
We can manage this until the business carries on running well into the black, settles its foundations in readiness for a Franchise Manager to hit the ground running without having to justify his operational activities, allowing him to get on with the job of recruiting additional franchisees under the guide and direction of his peers, with the Management Team.
We have seen this course of action succeed time and time again as the projections below outline the financial journey to success without having to worry about the above, as we create the revenue income, below.
Planning & Initial Launch
Planning and Initial Launch are the first steps in taking the franchise journey. This is the time of becoming a franchisor and creating the franchise brand.
Below is an outlined example of how the financial platform conducts itself on revenue to the Master Franchisor that being, “you”.
| Franchisors 5 Year Projection | |||||||||||||
| Planning & Initial Launch | |||||||||||||
| Month | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | Total |
| Income | |||||||||||||
| Franchised Openings /Time Lag | 1.00 | 1.00 | 1.00 | 3.00 | |||||||||
| Franchise Initial Fee | 10,000.00 | 10,000.00 | 10,000.00 | 30,000.00 | |||||||||
| Re-occurring Fees | 1,000 | 1,000 | 1,000 | 2,000 | 2,000 | 2,000 | 3,000 | 3,000 | 3,000 | 18,000 | |||
| Training Levy | 200 | 200 | 200 | 400 | 400 | 400 | 600 | 600 | 600 | 3,600 | |||
| Marketing & Advertising Levy | 250 | 250 | 250 | 500 | 500 | 500 | 750 | 750 | 750 | 4,500 | |||
| Business Development Levy | 300 | 300 | 300 | 600 | 600 | 600 | 900 | 900 | 900 | 5,400 | |||
| Retail Sales Products & Produce | 500 | 500 | 500 | 1,000 | 1,000 | 1,000 | 1,500 | 1,500 | 1,500 | 9,000 | |||
| Opening Commissions/Equipment ETC | 1,000.00 | 1,000.00 | 1,000.00 | 3,000 | |||||||||
| IT & Software | 200 | 200 | 200 | 400 | 400 | 400 | 600 | 600 | 600 | 3600 | |||
| Gross Income (EBIT) | 12,450 | 3,450 | 2,450 | 14,900 | 5,900 | 4,900 | 17,350 | 8,350 | 7,350 | 77,100 | |||
| Year 1 Month | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | Total |
| Income | |||||||||||||
| Franchised Openings/Time Lag | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 5.00 | |||||||
| Franchise Initial Fee | 10,000.00 | 10,000.00 | 10,000.00 | 10,000.00 | 10,000.00 | 50,000.00 | |||||||
| Re-occurring Fees | 3,000.00 | 3,000.00 | 4,000.00 | 4,000.00 | 5,000.00 | 5,000.00 | 6,000.00 | 6,000.00 | 7,000.00 | 7,000.00 | 8,000.00 | 8,000.00 | 66,000.00 |
| Training Levy | 600.00 | 600.00 | 800.00 | 800.00 | 1,000.00 | 1,000.00 | 1,200.00 | 1,200.00 | 1,400.00 | 1,400.00 | 1,600.00 | 1,600.00 | 13,200.00 |
| Marketing & Advertising Levy | 750.00 | 750.00 | 1,000.00 | 1,000.00 | 1,250.00 | 1,250.00 | 1,500.00 | 1,500.00 | 1,750.00 | 1,750.00 | 2,000.00 | 2,000.00 | 16,500.00 |
| Business Development Levy | 900.00 | 900.00 | 1,200.00 | 1,200.00 | 1,500.00 | 1,500.00 | 1,800.00 | 1,800.00 | 2,100.00 | 2,100.00 | 2,400.00 | 2,400.00 | 19,800.00 |
| Retail Sales Products & Produce | 1,500.00 | 1,500.00 | 2,000.00 | 2,000.00 | 2,500.00 | 2,500.00 | 3,000.00 | 3,000.00 | 3,500.00 | 3,500.00 | 4,000.00 | 4,000.00 | 33,000.00 |
| Opening Commissions/Equipment ETC | 1,000.00 | 1,000.00 | 1,000.00 | 1,000.00 | 1,000.00 | 5,000.00 | |||||||
| IT & Software | 600.00 | 600.00 | 800.00 | 800.00 | 1,000.00 | 1,000.00 | 1,200.00 | 1,200.00 | 1,400.00 | 1,400.00 | 1,600.00 | 1,600.00 | 13,200.00 |
| Gross Income (EBIT) | 7,350.00 | 7,350.00 | 19,800.00 | 10,800.00 | 22,250.00 | 13,250.00 | 24,700.00 | 15,700.00 | 27,150.00 | 18,150.00 | 29,600.00 | 20,600.00 | 216,700.00 |
Franchise Openings
As you can see, there are 3 Initial franchises sold in the year of Planning and Initial Launch with a growth of 5 in the first year, 9 in the year 2, 12 in the year 3, 14 in the year 4 and 17 in year 5 totalling 60.There is no real income in the Year of Planning & Initial Launch apart from initial fees and minor fees.
Note the dramatic increase in revenue in the first year; this is due to Planning & Initial Launch being the catalyst for the next trading year and so forth for the second then third and so on till the fifth year.
| Year 2 Month | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | Total |
| Income | |||||||||||||
| Franchise Openings/Time Lag | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 9.00 | |||
| Franchise Initial Fee | 10,000.00 | 10,000.00 | 10,000.00 | 10,000.00 | 10,000.00 | 10,000.00 | 10,000.00 | 10,000.00 | 10,000.00 | 90,000.00 | |||
| Re-occurring Fees | 8,000.00 | 9,000.00 | 10,000.00 | 11,000.00 | 12,000.00 | 13,000.00 | 14,000.00 | 15,000.00 | 16,000.00 | 16,000.00 | 17,000.00 | 17,000.00 | 158,000.00 |
| Training Levy | 1,600.00 | 1,800.00 | 2,000.00 | 2,200.00 | 2,400.00 | 2,600.00 | 2,800.00 | 3,000.00 | 3,200.00 | 3,200.00 | 3,400.00 | 3,400.00 | 31,600.00 |
| Marketing & Advertising Levy | 2,000.00 | 2,250.00 | 2,500.00 | 2,750.00 | 3,000.00 | 3,250.00 | 3,500.00 | 3,750.00 | 4,000.00 | 4,000.00 | 4,250.00 | 4,250.00 | 39,500.00 |
| Business Development Levy | 2,400.00 | 2,700.00 | 3,000.00 | 3,300.00 | 3,600.00 | 3,900.00 | 4,200.00 | 4,500.00 | 4,800.00 | 4,800.00 | 5,100.00 | 5,100.00 | 47,400.00 |
| Retail Sales Products & Produce | 4,000.00 | 4,500.00 | 5,000.00 | 5,500.00 | 6,000.00 | 6,500.00 | 7,000.00 | 7,500.00 | 8,000.00 | 8,000.00 | 8,500.00 | 8,500.00 | 79,000.00 |
| Opening Commissions/Equipment ETC | 1,000.00 | 1,000.00 | 1,000.00 | 1,000.00 | 1,000.00 | 1,000.00 | 1,000.00 | 1,000.00 | 1,000.00 | 9,000.00 | |||
| IT & Software | 1,600.00 | 1,800.00 | 2,000.00 | 2,200.00 | 2,400.00 | 2,600.00 | 2,800.00 | 3,000.00 | 3,200.00 | 3,200.00 | 3,400.00 | 3,400.00 | 31,600.00 |
| Gross Income (EBIT) | 19,600.00 | 32,050.00 | 35,500.00 | 37,950.00 | 40,400.00 | 42,850.00 | 45,300.00 | 47,750.00 | 50,200.00 | 40,200.00 | 51,650.00 | 42,650.00 | 486,100.00 |
| Year 3 Month | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | Total |
| Income | |||||||||||||
| Franchise Openings/Time Lag | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 12.00 |
| Franchise Initial Fee | 10,000.00 | 10,000.00 | 10,000.00 | 10,000.00 | 10,000.00 | 10,000.00 | 10,000.00 | 10,000.00 | 10,000.00 | 10,000.00 | 10,000.00 | 10,000.00 | 120,000.00 |
| Re-occurring Fees | 17,000.00 | 18,000.00 | 19,000.00 | 20,000.00 | 21,000.00 | 22,000.00 | 23,000.00 | 24,000.00 | 25,000.00 | 26,000.00 | 27,000.00 | 28,000.00 | 270,000.00 |
| Training Levy | 3,400.00 | 3,600.00 | 3,800.00 | 4,000.00 | 4,200.00 | 4,400.00 | 4,600.00 | 4,800.00 | 5,000.00 | 5,200.00 | 5,400.00 | 5,600.00 | 54,000.00 |
| Marketing & Advertising Levy | 4,250.00 | 4,500.00 | 4,750.00 | 5,000.00 | 5,250.00 | 5,500.00 | 5,750.00 | 6,000.00 | 6,250.00 | 6,500.00 | 6,750.00 | 7,000.00 | 67,500.00 |
| Business Development Levy | 5,100.00 | 5,400.00 | 5,700.00 | 6,000.00 | 6,300.00 | 6,600.00 | 6,900.00 | 7,200.00 | 7,500.00 | 7,800.00 | 8,100.00 | 8,400.00 | 81,000.00 |
| Retail Sales Products & Produce | 8,500.00 | 9,000.00 | 9,500.00 | 10,000.00 | 10,500.00 | 11,000.00 | 11,500.00 | 12,000.00 | 12,500.00 | 13,000.00 | 13,500.00 | 14,000.00 | 135,000.00 |
| Opening Commissions/Equipment ETC | 1,000.00 | 1,000.00 | 1,000.00 | 1,000.00 | 1,000.00 | 1,000.00 | 1,000.00 | 1,000.00 | 1,000.00 | 1,000.00 | 1,000.00 | 11,000.00 | |
| IT & Software | 3,400.00 | 3,600.00 | 3,800.00 | 4,000.00 | 4,200.00 | 4,400.00 | 4,600.00 | 4,800.00 | 5,000.00 | 5,200.00 | 5,400.00 | 5,600.00 | 54,000.00 |
| Gross Income (EBIT) | 51,650.00 | 55,100.00 | 57,550.00 | 60,000.00 | 62,450.00 | 64,900.00 | 67,350.00 | 69,800.00 | 72,250.00 | 74,700.00 | 77,150.00 | 79,600.00 | 792,500.00 |
Income Streams on Excel
Income streams vary as not all business models will be the same.
Example:-The re-occurring fees or royalty as it is also known is shown at £1000 per month however this is dependent upon the income and the profit the business model generates so this may fluctuate.
This may be a fixed fee as shown above or a percentage of turnover which is normal at 4% to 8% of turnover with a Marketing and Advertising levy of an additional 2%-3%
All other income streams have been kept to a minimal in comparison to other existing Franchise Business Models.
Income Calculation
We shall use year 1 month 9 as an example to this:-
Taking into consideration on openings projected to start trading
7 stores x 12 months = 84 payments, times the initial amount then projects the roll over to total amount. If we minus the Initial £10,000.00 Franchise Fee on that amount, then equals £17,150.00 per month re-occurring income if there were never any more franchises opened.
The same calculation can be applied at any point throughout the excel projection creating the re-occurring monthly total.
Franchise Initial Fee
We have placed the Franchisees Initial Fee for one franchise at the rate of a very modest and conservative fee of just £10,000.00. Not a great deal of income if we look at selling just one however when we sell sixty then £600,000.00 does become admirable.
Taking out the initial Franchise Fee of £10,000.00 will still leave you with a high level of continuous revenue income streams showing in excess of £1 Million.
There is also a need to take into consideration the renewal fee of an additional £10,000.00 and the end of the term of the Franchise Contract and the constant royalties thereafter.
Re-occurring Fees
Re-occurring fees, as an example (royalty) start at £1000 which is shown as a fixed fee. This fee can also be shown as a percentage of turn-over pending, turn-over.
Note:-This has been kept to a minimum growth until we see the possibility of gradually increasing the fees, at a rate and possibly implementing a flat 2k fee, or more on a monthly rate which would dramatically increase the re-occurring income.
| Year 4 Month | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | Total |
| Income | |||||||||||||
| Franchise Openings /Time Lag | 1.00 | 1.00 | 2.00 | 1.00 | 1.00 | 2.00 | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 14.00 |
| Franchise Initial Fee | 10,000.00 | 10,000.00 | 20,000.00 | 10,000.00 | 10,000.00 | 20,000.00 | 10,000.00 | 10,000.00 | 10,000.00 | 10,000.00 | 10,000.00 | 10,000.00 | 140,000.00 |
| Re-occurring Fees | 29,000.00 | 30,000.00 | 32,000.00 | 33,000.00 | 34,000.00 | 36,000.00 | 37,000.00 | 38,000.00 | 39,000.00 | 40,000.00 | 41,000.00 | 42,000.00 | 431,000.00 |
| Training Levy | 5,800.00 | 6,000.00 | 6,400.00 | 6,600.00 | 6,800.00 | 7,200.00 | 7,400.00 | 7,600.00 | 7,800.00 | 8,000.00 | 8,200.00 | 8,400.00 | 86,200.00 |
| Marketing & Advertising Levy | 7,250.00 | 7,500.00 | 8,000.00 | 8,250.00 | 8,500.00 | 9,000.00 | 9,250.00 | 9,500.00 | 9,750.00 | 10,000.00 | 10,250.00 | 10,500.00 | 107,750.00 |
| Business Development Levy | 8,700.00 | 9,000.00 | 9,600.00 | 9,900.00 | 10,200.00 | 10,800.00 | 11,100.00 | 11,400.00 | 11,700.00 | 12,000.00 | 12,300.00 | 12,600.00 | 129,300.00 |
| Retail Sales Products & Produce | 14,500.00 | 15,000.00 | 16,000.00 | 16,500.00 | 17,000.00 | 18,000.00 | 18,500.00 | 19,000.00 | 19,500.00 | 20,000.00 | 20,500.00 | 21,000.00 | 215,500.00 |
| Opening Commissions/Equipment ETC | 1,000.00 | 1,000.00 | 1,000.00 | 2,000.00 | 1,000.00 | 1,000.00 | 2,000.00 | 1,000.00 | 1,000.00 | 1,000.00 | 1,000.00 | 1,000.00 | 14,000.00 |
| IT & Software | 5,800.00 | 6,000.00 | 6,400.00 | 6,600.00 | 6,800.00 | 7,200.00 | 7,400.00 | 7,600.00 | 7,800.00 | 8,000.00 | 8,200.00 | 8,400.00 | 86,200.00 |
| Gross Income (EBIT) | 82,050.00 | 84,500.00 | 99,400.00 | 92,850.00 | 94,300.00 | 109,200.00 | 102,650.00 | 104,100.00 | 106,550.00 | 109,000.00 | 111,450.00 | 113,900.00 | 1,209,950.00 |
| Year 5 Month | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | Total |
| Income | |||||||||||||
| Franchise Openings /Time Lag | 2.00 | 1.00 | 2.00 | 1.00 | 2.00 | 2.00 | 2.00 | 1.00 | 1.00 | 1.00 | 1.00 | 1.00 | 17.00 |
| Franchise Initial Fee | 20,000.00 | 10,000.00 | 20,000.00 | 10,000.00 | 20,000.00 | 20,000.00 | 20,000.00 | 10,000.00 | 10,000.00 | 10,000.00 | 10,000.00 | 10,000.00 | 170,000.00 |
| Re-occurring Fees | 44,000.00 | 45,000.00 | 47,000.00 | 48,000.00 | 50,000.00 | 52,000.00 | 54,000.00 | 55,000.00 | 56,000.00 | 57,000.00 | 58,000.00 | 59,000.00 | 625,000.00 |
| Training Levy | 8,800.00 | 9,000.00 | 9,400.00 | 9,400.00 | 9,800.00 | 10,000.00 | 10,400.00 | 10,600.00 | 10,800.00 | 11,000.00 | 11,200.00 | 11,400.00 | 121,800.00 |
| Marketing & Advertising Levy | 11,000.00 | 11,250.00 | 11,750.00 | 12,000.00 | 12,500.00 | 12,750.00 | 13,250.00 | 13,250.00 | 13,500.00 | 13,750.00 | 14,000.00 | 14,250.00 | 153,250.00 |
| Business Development Levy | 13,200.00 | 13,500.00 | 14,100.00 | 14,400.00 | 15,000.00 | 15,300.00 | 15,900.00 | 16,200.00 | 16,500.00 | 16,800.00 | 17,100.00 | 17,400.00 | 185,400.00 |
| Retail Sales Products & Produce | 22,000.00 | 22,500.00 | 23,500.00 | 24,000.00 | 25,000.00 | 26,000.00 | 27,000.00 | 27,500.00 | 28,000.00 | 28,500.00 | 29,000.00 | 29,500.00 | 312,500.00 |
| Opening Commissions/Equipment ETC | 1,000.00 | 2,000.00 | 1,000.00 | 2,000.00 | 1,000.00 | 2,000.00 | 2,000.00 | 2,000.00 | 1,000.00 | 1,000.00 | 1,000.00 | 1,000.00 | 17,000.00 |
| IT & Software | 8,800.00 | 9,000.00 | 9,400.00 | 9,400.00 | 9,800.00 | 10,000.00 | 10,400.00 | 10,600.00 | 10,800.00 | 11,000.00 | 11,200.00 | 11,400.00 | 121,800.00 |
| Gross Income (EBIT) | 128,800.00 | 122,250.00 | 136,150.00 | 129,200.00 | 143,100.00 | 148,050.00 | 152,950.00 | 145,150.00 | 146,600.00 | 149,050.00 | 151,500.00 | 153,950.00 | 1,706,750.00 |
Training Levy
These are figures based upon the minimal charge of £200.00 per month and could increase as the franchise network increases.
Training Levy can always be charged and is integral to the success of any business.
There is also consideration for the initial training to be given to the franchisee at an additional single one off fee as stated in the introduction. It is normalised at around £2000.00-£5000.00 per signed Franchise Contract.
Marketing & Advertising Levy
These are figures based upon the minimal charge of £250.00 per month and could increase as the franchise network increases.
Marketing Levy can always be charged and is integral to the successful growth of any business and in addition, the franchisee has to also advertise their, own business at a rate which is affordable to the business model.
Monthly Business Development Levy:
These are figures based upon the minimal charge of £300.00 per month and could increase as the franchise network increases.
Development Levy can always be charged and is integral for the growth of any business.
Retail Sales – Products & Produce
These are figures based upon the minimal charge of £500.00 per month and could increase as the franchise network increases.
Retail Sales- Products & Produce can always be charged and is integral for the growth of any business.
If, your current business purchases goods and services to make a profit then this can be charged to the franchisee at a rate which will generate additional income (See Introduction) for your franchise, the Franchisors business supplying the franchisee with Products & Produce at an additional percentage back to the Master Franchisor, that being, “You”.
And in addition, each store or business may require stock to open (Pending Business Model) which can be supplied by the Franchisors business model as part of an opening cost. A 20% Commission can be charged on the opening stock supplied to the franchisee which is normal practice.
“This has not been shown in the projections”.
Summary
There is in effect no risk in this venture as we separate the Franchise business from the current trading business that you currently own, protecting the current brand of what the owner has already created by opening a new company, then using the new created company to franchise the owners business model with no risk as the replica, in order to franchise the business.
This then leading to recruiting franchisees with the management team then leading to paying fees as part of the 5 year forecast projection listed above.
“Welcome to the world of franchising
