Restaurant Franchising, 3rd Edition

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CHAPTER 8

FINANCIAL ASPECTS OF FRANCHISING

INTRODUCTION

M

any businesses fail if they do not plan the fi nancial aspects of a busi-

ness well. Sound planning is necessary for all fi nancial commitments.

This includes continuous monitoring of fi nancial position, maintaining a

healthy cash fl ow, synchronizing growth with fi nancial position, and plan-

ning future development based on fi nances. Thus how fi nances are managed

and appropriately used decides the profi tability of a business. Franchising

requires investment from all pa rties, fi rst from franchisors and later from

franchisees. For franchisors the investment is primarily due to developing