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Franchise payback calculator

A franchise pays back when the profit it earns each month has added up to what you spent to open it. Enter what the outlet will cost, what it will sell and what it will spend each month, and this calculator gives the months to payback, the yearly return on your investment and the monthly sales the outlet needs just to break even.

  • Payback = total investment ÷ monthly profit after every cost.
  • Monthly profit = sales × margin − royalty − marketing fee − rent and salaries − loan EMI.
  • Use your own rent and salary quotes; the brand's figure is a projection, not your result.

Your numbers

Investment and royalty are prefilled from the brand's published listing. Everything else is an example — replace it with quotes for your own site.

= ₹5,00,000 — five lakh

= ₹2,00,000 — two lakh

% of sales

Share of sales left after goods, materials or course kits

= ₹70,000 — seventy thousand

% of sales

Leave blank if the royalty is only a percentage

% of sales

Work it out with the loan EMI calculator

Payback period
15 months
1 yr 3 mo
Monthly profit
₹34,000
After every cost entered, before income tax
Yearly return
82%
Monthly profit × 12 ÷ investment
Break-even sales
₹1,34,615/mo
Sales needed to cover every monthly cost
Show the monthly working
Gross profit (sales × margin)
₹1,20,000
Royalty
−₹12,000
Marketing fee
−₹4,000
Fixed costs
−₹70,000
Loan EMI
−₹0
Monthly profit
₹34,000

What this calculator leaves out

  • Ramp-up. A new outlet rarely sells at its normal level from the first month. Add the months you expect it to take to build sales to the payback figure, and keep working capital for them.
  • Income tax. Profit here is before tax, so the real payback is longer.
  • Seasonality. Education follows the admission and exam calendar, food follows festivals and weather. Use an average month, not the best one.
  • Renewal and refit. If the agreement requires a renewal fee or a store refresh, that money has to come out of the same profit.

Testing a brand's payback claim

Many listings on this site carry a payback period the brand itself published. Put the brand's investment and royalty in above, then your own rent and salary quotes, and see what monthly sales the brand's payback claim implies. If those sales are well above what comparable outlets nearby do, ask the brand where its figure comes from.

Browse listings with published figures →Loan EMI calculatorIs a franchise profitable?Royalty and fees explained

Franchise payback: common questions

+How is franchise payback period calculated?

Payback period = total investment ÷ monthly profit. Monthly profit is sales × gross margin, minus royalty, marketing fee, rent, salaries, utilities and any loan EMI. If the outlet makes ₹50,000 a month after every cost and cost ₹10 lakh to open, it pays back in 20 months.

+What is a good payback period for a franchise?

There is no single right number; it depends on how long the agreement runs and how much risk you carry. The test that matters is that payback comes comfortably inside the agreement term, because a franchise that pays back in year four of a five-year term leaves one year of real profit before renewal costs arrive.

+Why is my calculated payback longer than the brand's claim?

Brand payback figures are usually projections made at a mature outlet's sales. Your own figure includes your rent, your salaries and your loan, and it should also allow for the months it takes to build sales after opening, which this calculator leaves to you. Ask the brand which outlets its figure comes from, and speak to two franchisees it did not pick for you.

+Should I add GST to the royalty?

Royalty is usually quoted before GST, which is charged at 18%. If you are GST-registered you may be able to claim it back as input credit; if not, it is a real cost. Tick the GST box to see the difference.

+Does this calculator account for income tax and depreciation?

No. It shows operating profit before income tax, so the payback it gives is the optimistic edge of the real answer. Depreciation on fit-out matters for your tax computation, not for cash payback.

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