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Franchise Fee ROI Calculator

Work out franchise fee roi instantly with clear inputs, formula shown and shareable results.

About Franchise Fee ROI Calculator

Franchise economics hinge on payback against the agreement term. If payback approaches half the term you have little margin for a soft trading year, and renewal fees at the end may reset the investment before you have recovered it.

Formulas

Total investment

Investment = Initial franchise fee + Fit-out and working capital

Payback

Payback years = Total investment / Annual net profit

Return over term

Return % = (Annual profit x Term - Investment) / Investment x 100

Worked example

With the default values below, Franchise Fee ROI Calculator returns Payback period of 4.46. Change any input above and every figure here is recalculated in your browser.

Inputs used

Initial franchise fee
350,000
Fit-out and working capital
900,000
Annual net profit after royalties
280,000
Agreement term
7 years

Results

Payback period
4.46
Total upfront investment
$1,250,000.00
Annual return on investment
22.40%
Total return over the agreement term
56.80%

Step by step

  1. 1Values used
  2. 2Total investment
  3. 3Payback
  4. 4Return over term
  5. 5Payback period= 4.46
  6. 6Total upfront investment= 1,250,000.00
  7. 7Annual return on investment= 22.40
  8. 8Total return over the agreement term= 56.80

Assumptions and limits

  • The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
  • In particular, this calculator does not take inflation or tax into account.
  • Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
  • This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

What payback should I look for?

Under three years is attractive; beyond four the deal depends heavily on renewal terms and the resale value of the outlet.

Is the franchise fee amortisable?

For accounting purposes it is usually capitalised and amortised over the agreement term. Tax treatment varies by jurisdiction.

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Franchise Fee ROI Calculator – Calculate Payback period