Financial potential franchisee must have a minimum net
Financial Plan In financing any business the business owner must have a clear financial plan. A clear financial plan provides invaluable help in keeping a business focused and generating a profit. Without a financial plan it is impossible to know how the business is performing. In the Denny’s franchise agreement a potential franchisee must have a minimum net worh of €800,000 of which €250,000 must be cash. Denny’s insist on a clear financial plan so that they are satisfied that the potential franchisee is competent in terms of financial ability to build a business.
Our business plan provides a detailed outline of our vision for operating a Denny’s franchise. Based upon our research, the following is a realistic forcast of our business. Our investment – €200,000 (an investment of €50,000 cash each) AIB bank overdraft – €100,000. (This will assist us with our initial cash flow). Bank debenture – €600,000. Equipment leasing. – €360,000. (60 monthly payments of €6,000) As Denny’s is an American franchise all their guidelines are in American Dollars. I have used a flat exchange rate between the € and $ for my cash flow forecasts. his allows clarity for the reader. (1$ = €1) Set up Cost. Franchise fee – €40,000. Machinery – €25,000 (AC System) Office, Furniture and Equipment – €8,000 (Manager office and staff room) Computer Equipment – €35,000 (POS system, Back office system) Restaurant Area Fittings – €150,000 (Tables & Chairs for customer area) Lighting – €44,000 (Kithen & Restaurant area) Fire and Safety – €8,000 (Signage, Fire extinguishers and Fire blankets. ) Security – €22,000 (CCTV) WC – €18,000 (Ladies, Gents and Disabled Facilities) TOTAL – €350,000 Additional Costs.
Leasing – €6000 per month (Food prep facilities, servicing included) 5 year plan. Advertising Fee. This fee refers to the Denny’s franchise agreement; 4% of sales contribution to the advertising fund. As we will be the first Denny’s franchise in Ireland, they have agreed keep this contribution separate to the general andvertising fund. They will assist us in investing this fund directly into Ireland. Franchise Fee Initial fee is €40,000. This grants us the right to use the Denny’s system and trademarks and covers our thirteen week training course with Denny’s in America.
In addition their is a royalty fee of 4% of sales. This covers ongoing support and assistance. Bank Debenture. €600,000 – This loan will be repaid over five years. (€12,666 per month for 5 years. ) Sales Analysis. Our sales figures are based on the percentage of the footfall to Dundrum Town Centre. We believe it is realistic and concervative estimate of the potential business income. This is based on a footfall of 200,000 people per week. With the main percentage of Dundrum customers in the age bracket of 16 to 44 this is exactly Denny’s target market.
Sales Year 1 – €2,854,000 Sales Year 2 – €3,017,520 – Based on 8% increase on Year 1. Sales Year 3 – €3,138,219 – Based on 4% increas on Year 2. As 90% of Denny’s restaurants are operated by franchisee’s, Denny’s have stated that they will aggressively dedicate their experties to guarantee their flagship store in Ireland is a financial success. 6 Month Start-Up Schedule. Month 1 A limited company formed by four Entrepreneurs; Richard O’ Driscoll, Lillian O’ Brien, Shelley White and Christopher Farrell.
Legal advice and agreement reached, partnership agreement concluded. Financial advice and accounting services agreement reached with Mazars Financial Services. Financing agreement with AIB bank concluded. Negotiations and Franchise agreement reached with Denny’s USA. Location Analysis Location chosen and premises agreement with landlord. Month 2 Begin 13 week training for the four franchisee’s. Research and development of restaurant ideas. Observe the American market. Month 3 Legal process completed. All agreements signed. Begin the tender process. Month 4
Develop HR plan. Contact potential suppliers. Denny’s signage erected at store location in Dundrum Town Centre indicating Opening Soon. Online PR campaign initiated. Month 5 Franchisee’s conclude training. Negotiations process completed and agreed with suppliers. This is also agreed with Denny’s. Interviews with potential staff. Preparation for Ireland’s first Denny’s Restaurant. Interior plan and fitout proposed and agreed. Month 6 Fitout takes place and completed for opening. Staff chosen and training commences with a Denny’s support team from the USA.
Pre-opening activities – Local store marketing, food sampling in centre, leaflet drop. Kitchen and telecommunications fittings completed. Food & Beverage order completed and delivery schedule agreed. Opening Week Food & Beverage deliveries take place 2 days prior to opening day. Food & Beverage deliveries from then on will be daily. All kitchen appliances checked. ‘Mise En Place’ set up completed. Staff uniforms etc. ready and positions appointed. Restaurant layout and ergonomics completed. Restaurant ready for opening day.