How to use the company-owned vs franchise profit calculator
This calculator compares the two options from the brand side: running a location yourself or franchising it. An owned unit books the whole sales figure, but the brand also carries cost of goods, rent and payroll. A franchised unit books no sales for the brand at all, only royalty, supply margin and the franchise fee, while the operating burden and the downside risk sit with the franchisee.
Franchised profit adds royalty income, supply margin and the monthly share of the initial fee, then subtracts the support cost per unit. The initial fee arrives once, so spreading it over the agreement term keeps the comparison honest instead of flattering the first month. Supply margin is the cost of goods amount multiplied by your supply margin rate.
Ad fund contributions are left out, on the basis that they are spent on advertising rather than kept. Owned units swing hard with sales while royalty income moves gently with them, so try a few sales figures to see which option is less exposed.
Frequently asked questions
Not on these numbers alone. Company-owned units carry value that never shows up as profit, including testing new products, setting operating standards and keeping direct control of the brand.
Ad fund contributions are normally spent on advertising, so nothing is left as brand profit. If your structure keeps a margin on it, fold that margin into the royalty rate instead.