How long does it take to start making a profit after the franchise fees have been paid back?

Q: How long does it take to start making a profit after the franchise fees have been paid back?
Gino Marquez, Great Yarmouth

Cathryn Hayes: The length of time it takes for a franchise to become profitable is dependent on the type of product/service offered, the market sector in which it operates and how much investment is required at the outset. The franchisor should provide you with financial forecasts based on a pilot operation, performance of existing franchisees, allowing you to understand when you can expect to break even.

You must work out how much it will cost to set up the franchise, how much you can personally contribute and how much you need to borrow. You should also carry out a full assessment of your personal financial commitments to ensure your chosen business is capable of generating enough income to cover these. Ensuring that you have enough working capital is important. The business will have various expenses which will need to be paid. You must also be able to cover your own personal expenses as the business may not be able to pay your wages for some time.

This financial data will form the basis of your business plan, covering break-even analysis, profit projections and cash flow forecast, demonstrating the business' viability and its ability to meet its commitments. If you do need to borrow, this document will be used to assess your request for finance.