Franchise brochures lead with brand power and bury the arithmetic. The arithmetic is what you're buying: fee plus fit-out capex up front, royalty off the top of every month, and whatever margin survives. Enter the deal terms and your honest revenue projection, and this calculator gives you monthly profit after royalty, the payback period, and the five-year return, before the brochure's version of it.
Franchise payback = (franchise fee + capex) ÷ monthly profit after royalty, where monthly profit = revenue × operating margin − royalty % of revenue − fixed fees. Most healthy F&B franchises pay back in 24-42 months.
| Franchise fee (one-time) | 1500000 ₹ |
| Fit-out & equipment capex | 3500000 ₹ |
| Projected monthly revenue | 1200000 ₹ |
| Operating margin before royalty | 18 % |
| Royalty on revenue | 6 % |
| Fixed monthly brand/marketing fees | 15000 ₹ |
Commonly 4-8% of net sales, with some brands charging lower royalty but higher-margin mandatory supply of ingredients, which is royalty by another name. Model mandatory-supply markups into your operating margin, not the royalty line, and ask existing franchisees what the real all-in take is.
Under 24 months is strong, 24-42 is the normal healthy band, and past 48 the agreement term starts to matter enormously, a 5-year agreement with a 4-year payback leaves one year of actual return. Always compare payback against the agreement length and the renewal terms.
Yours, built from visits to existing outlets at your city tier and footfall pattern, and stress-tested at 70% of that. Brand projections are marketing documents describing their best outlets. If the deal only works at the brochure numbers, the deal doesn't work.
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