@rongold
Don't let people lie to you, and don't lie to yourself when running numbers, that is not how net income works, you need to be paying employees and including royalties in this number to understand if the business is worthwhile...
For instance if that 200k comes from 1MM in sales then roughly 80k is going to be subtracted from that to pay for royalties... and if you are staffing the place with say 3-4 people so its open 7 days a week at $15/hr that's another 80-120k gone depending on how full time the staff is... Suddenly your 200k is 0-40k...
As an aside I'm making some assumtions here for your numbers... but even still I probably would never buy a food franchise that had 8% royalties... most food businesses survive on between 5-10% margins and if your franchisor is taking 8% of that, then unless you happen to have an absolute dream location or you are an owner operator working 24/7 slinging boba as a sole operator to reduce costs. These types of franchises are pretty much just a trap for immigrants looking for employment but don't have a way to showcase their qualification in the U.S. market but do have net worth.
Total Net Income: 200000 not including payroll and royalty.
Don't let people lie to you, and don't lie to yourself when running numbers, that is not how net income works, you need to be paying employees and including royalties in this number to understand if the business is worthwhile...
For instance if that 200k comes from 1MM in sales then roughly 80k is going to be subtracted from that to pay for royalties... and if you are staffing the place with say 3-4 people so its open 7 days a week at $15/hr that's another 80-120k gone depending on how full time the staff is... Suddenly your 200k is 0-40k...
As an aside I'm making some assumtions here for your numbers... but even still I probably would never buy a food franchise that had 8% royalties... most food businesses survive on between 5-10% margins and if your franchisor is taking 8% of that, then unless you happen to have an absolute dream location or you are an owner operator working 24/7 slinging boba as a sole operator to reduce costs. These types of franchises are pretty much just a trap for immigrants looking for employment but don't have a way to showcase their qualification in the U.S. market but do have net worth.