Finalize The Financial Model

Your financial model was prepared initially with limited information. Now’s the time to refine it based on everything you've learned:

Refine, Refine, Refine

• Update Regularly: Incorporate insights from your outside research and validation calls.

• Analyze Your Notes: Go through all notes from your franchisee and franchisor calls carefully. Highlight revenue highs and lows, growth expectations, and other critical KPIs you've discussed.

• Scenario Testing: Adjust your model with these findings, testing various scenarios. This practice solidifies your understanding and confidence in the business's financial viability.

• Bank-Ready: A refined, well-tested model is essential when approaching banks or lenders for financing.

The most important part is to remember you are not going to be a number one franchisee in the first year. Plan to be a middle performer for the first few years and if you do better, great! Make sure you understand how long it takes to grow, the rate of growth, and how much you need to invest in marketing to gain traction in the market.

It isn’t just about building a P&L but also about your balance sheet and cash flow management. You can use online tools to do this or just do your best. By putting in this level of effort into the financial modeling, you will uncover questions about the franchise you wouldn’t have thought of otherwise. It doesn’t matter if it’s perfect since you will have an accountant fix everything for you, but doing the work yourself is indispensable to understanding the franchise.

These articles are simple overviews of the franchise research process to know what to mentally prepare for as you begin the journey. If you want a guide that will give you the right questions to ask, at the right time, to the right person, you need to work with a Tracer Franchising broker. 

Click here to schedule a 30 minute intro call to begin your franchise research process. Our services are free since we are paid by the franchises. 

If you prefer to do the research solo, you can use the free Tracer Franchise Research app

All Steps in the Franchise Research Process

1. Franchise Education

2. Intro Call with Broker

3. Take the Matching Quiz and Follow up Interview

4. Franchise Presentation

5. Initial Call with Franchisors

6. Initial Franchise Disclosure Document (FDD) Research

7. Non-FDD Focused Calls

8. Start Funding Discussions

9. Financial Modeling

10. Speak to Franchisees (Validation)

11. FDD Deep Dive

12. FDD Review Call with Franchisor

13. Outside Research

14. Finalize Your Financial Model

15. Final Validation

16. Attorney and Accountant Review

17. Meet the Franchisor in Person (Discovery Day)

18. Making Your Decision- The Franchise Checklist