Foodservice franchise evaluation
How to evaluate a restaurant franchise: the numbers to demand, red flags
What to check
Franchisor's own locations
At least 2–3 own locations operating 2+ years profitably. Franchise-only network = unproven model.
Unit economics
Demand a real location's P&L: revenue, FC%, payroll, margin, payback. 'Average check 300, traffic 200' is a slide, not economics.
Franchise fee and royalties
$10–30k fee for a café is normal; royalties 3–6% of revenue; marketing fee 1–2%. Royalty on profit instead of revenue is a loss-trap.
Closed locations
Ask for ALL franchisees over 3 years — including closed ones. If 30%+ closed, the model doesn't scale.
Mandatory purchases
Required to buy supplies/equipment from the franchisor? Markup on goods is a hidden royalty. Compare their prices to market before signing.
The agreement
Territory protection, exit terms, transfer on sale, penalties. A franchise lawyer reviewing the contract (20–30k UAH) pays for itself.
Red flags
'Payback in 6 months', pressure 'only 2 cities left', refusal to show P&L, franchisor without an office/test kitchen.
You're buying a model, not a brand: if the franchisor has no own locations running 2+ years — you're buying a logo. Demand the financial model, franchise agreement, and a list of closed locations.