Introduction to the financial framework

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This section is very technical, do not hesitate to contact Olivier Gast for further information. Furthermore, ensure that you understand, when reading this section, that the budget of the franchise package for a consultant such as Olivier Gast must be substantial and serious (this is also a moral issue, one does not play with impunity with the life savings of a candidate franchisee).

Like any trading system, the relationship must always be win-win.
Americans talk about "partner for profit."

The financial framework on the franchisee’s side

Why do franchises attract candidate franchisees?
1. Because the franchisee becomes his own boss and that it's EBITDA allows him to pay wages.
2. Mainly because the capital invested (apart from bank loans - the IRR or ROI - return on investment) must be paid in the order of 20%. This means that the franchise is an excellent product with very comfortably paying financial capital.
3. By the franchisee's operations and by the existence that the business he owns is a future heritage.

The most difficult of the above to implement is the IRR of 20% reached on the operating account. Therefore, the investment except key money, at first, counting charges (royalties, entrance fees, depreciation, salaries and expenses, operating expenses, etc ...) must emit an IRR (rate return on investment) of 20%.

An IRR of 5 / 10% for a franchisee would not be interesting except for heavy franchises such as in the hotel industry for example.

This is what makes Olivier Gast say that if the IRR is not possible at around 20%, the concept would not be attractive and therefore difficult to franchise (especially in times of recession in which the Western world is undergoing).

On the Franchisor’s side, the financial framework (see franchise business plan)

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