The franchise business will contact you by means of email and/ or telephone only to the email address and phone number you have provided.
By submitting the enquiry form you are consenting to send your personal information to the selected franchise business.
You also agree to receive further newsletter email marketing from What Franchise.
Does a franchisee have to achieve minimum turnover levels?
All businesses have to achieve a minimum turnover level, as there will be a level of sales at which they at least break even. This, however, would do no more than maintain survival level, which would be further influenced by positive or negative cash flow.
It’s possible to far exceed the required level of sales, but if the goods or services aren’t being paid for in time or they’re heavily discounted, the business will run out of money if it exceeds its funding facilities and be forced to close.
Franchisors often set minimum performance clauses in their franchise agreements, which normally refer solely to levels of turnover. The British Franchise Association accepts ‘a requirement that the franchisee’s gross sales in any 12-month period (after their first year) shall at least reach 70 per cent of the average gross sales for the same period of all network franchisees who have been operating for longer than one year’.
Turnover is one thing, but in my view ‘minimum performance’ should include measures such as pricing, profitability and debt collection. These should all be the subject of regular review, best done by the automatic collection of accurate data via a robust franchise management system.
What’s done about poor results? Ideally, they should trigger a review and an agreed training intervention, rather than immediate talk of potential termination.
Brian Duckett is chairman of The Franchising Centre, part of the world’s largest network of specialist franchise consultants.
You might also be interested in
Will a franchisor ensure I operate my business within the required health and safety guidelines of the sector I operate in?
Answered by Shelley Nadler
Shelley Nadler writes: The franchisor should provide health and safety guidelines appropriate to the sector the franchise... read more
Answered by Louise Harris
Louise Harris writes: The initial investment in a franchise varies greatly across the industry, but it’s one... read more
Answered by John Pratt
John Pratt writes: As with all franchises, you have to ask yourself: Is this the sort of... read more
Answered by Alan Wilkinson
Alan Wilkinson writes: One of the attractions of franchising is the resilience it shows through hard times... read more
Exciting Franchise Opportunities
Companies to Consider
Assuming you have grown a team to support your clients potential for revenue: £50k, plus
Turnover of £250,000 with gross profit of £95,000
Little Inventors Montessori...
Up to £230,000
Family Law Assistance
Monthly sales of up to £8,000 based on a 37.5-hour week
Yes, via third party
60% bank funding, subject to status
Get expert franchising news delivered straight to your inbox
Franchise news, advice and new opportunities delivered weekly.
Must Read Articles
Added 2 years ago | 2 min read
Added 11 hours ago | 2 min read
Added one day ago | 2 min read
Find your next business opportunity
Search 100s of UK franchises and become your own boss today.
What Franchise Newsletter
Keep up to date with all the industry news