The tables can be used to indicate whether the rates being charged by the franchisor are within a normal range. A form that is often used in a business plan is a financial proforma. The financial proforma is a five year financial plan. The plan includes projections for income, expenses, cash flow and profits. Review this plan with your accountant and determine the potential return on investment for the franchise.
All new businesses are risky.
However, you must balance out three key areas to determine the degree of personal risk. These include your personal assets, resources for financing the franchise and the potential return on investment. You should be able to afford any loss to your personal assets. The financing should provide a monthly repayment schedule that is reasonable and affordable. Potential return on investment should directly correlate with the risk that is involved.