The big question on the minds of individuals intending to set up a franchise is the profit margins. Without an idea of what you are likely to make, depending on the circumstances, is probably the most important dimension. For a product like Yogurt which has a reasonably high demand, there are many considerations that need to be factored.
Here is a look at the ideal Frozen Yogurt Franchise Profit Margin that will make your business viable.
You need to clearly understand EBITDA statistics. The earnings before interest, tax, depreciation and amortization will give a clear idea of the revenues that you can expect. Remember, that these numbers are for specific locations and different customer demographics. It may or may not be the same in the location you intend to put up shop. You need to look closely at the data and find out similarities.
Factors that impact margins
There are multiple factors that impact margins. The overheads will account for a significant percentage of the costs. If you are at a location where rents are high, your margins will reduce. Similarly, if you are unable to find employees for the franchise easily, you may end up paying more wages. There may be additional regulations that you need to comply within specific locations. This can also increase the stress on your profit margins. Ideally, you should not be operating at profit margins below 15%, and if volumes are low, overheads are high, this will still not be profitable.
Sales volumes and the relation to margins
One of the most important aspects that will impact your business outcomes are the sales volumes. If your franchise clocks heavy footfalls, then you can make up for lesser margins by high volumes. This means that location and demographics are important. If your store is frequented by individuals who are health conscious or where other options are limited, you will find it easier to clock higher sales.
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