Payback on a franchise investment. The Franchise ROI Calculator takes initial investment (fee, fit-out, equipment), annual revenue, annual operating profit before royalties, royalty and marketing fees and returns return on investment plus annual profit after royalties, payback period, royalties paid per year. Results update as you type, and the formula is shown under the result so you can repeat it in your own spreadsheet.
Good business decisions come from putting numbers on the options before committing. Run the calculation with your best estimate, then again with a pessimistic one, and see whether the decision survives both. Use the worked example below to check the maths against your own figures.
How the Franchise ROI Calculator works
Franchise disclosure documents quote revenue; profit after royalties is what pays back the investment. A payback beyond five years deserves a hard look.
Worked example
With the example values (initial investment (fee, fit-out, equipment) of ₹300,000, annual revenue of ₹600,000, annual operating profit before royalties of ₹90,000, royalty and marketing fees of 6%), the return on investment is 18%; annual profit after royalties ₹54,000.00, payback period 5.6 years, royalties paid per year ₹36,000.00. Change any figure above and the result updates immediately; use Copy results to paste the summary into a note or email.
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Frequently Asked Questions
How is return on investment calculated?
ROI = (operating profit − royalties) ÷ initial investment; payback = investment ÷ annual net profit.
Which figures do I need?
Initial investment (fee, fit-out, equipment), annual revenue, annual operating profit before royalties, royalty and marketing fees. Take them from the same period and the same set of accounts or reports so the ratio is consistent, and check the example values as a guide to the units expected.
How reliable is the result?
As reliable as the estimates you enter. Run the calculation with optimistic and pessimistic inputs to see the range of outcomes before deciding.
