Unit Profitability
An expected pre-tax rate of return in the service industry is about 10-15%. In a healthy franchise system, we would expect territories within one standard deviation of the mean - about 68%, or 210 of 310 BrightStar territories - to fall within this range. Based on the Association's two previous profitability studies, however, we estimate that fewer than 20% of BrightStar territories are operating above a 10% pre-tax profit. Unit profitability, not sales, is the key metric for success; revenue is nothing more than a vanity number.
Many of us have invested our life savings into our BrightStar franchise with the expectation of growing our equity in the business. Bankers and investors use pre-tax profit to assess cash flow and its the best objective metric for evaluating the future value of a business Your profit not only determines the appropriate valuation of the business, but also affects the business’s ability to service acquisition debt, fund a company’s operations and capitalize on growth opportunities. Your profitability is your future.
Collectively, franchisees are the revenue engine that drive cash flow throughout the entire organization. Each franchisee must be properly maintained in order to optimize the speed of growth. Pre-tax profit is the key metric in determining franchisee health. With the understanding that building a premium brand is important to our long-term success, franchisee profitability must be the primary Key Performance Indicator by which strategic priorities are determined.
Many of us have invested our life savings into our BrightStar franchise with the expectation of growing our equity in the business. Bankers and investors use pre-tax profit to assess cash flow and its the best objective metric for evaluating the future value of a business Your profit not only determines the appropriate valuation of the business, but also affects the business’s ability to service acquisition debt, fund a company’s operations and capitalize on growth opportunities. Your profitability is your future.
Collectively, franchisees are the revenue engine that drive cash flow throughout the entire organization. Each franchisee must be properly maintained in order to optimize the speed of growth. Pre-tax profit is the key metric in determining franchisee health. With the understanding that building a premium brand is important to our long-term success, franchisee profitability must be the primary Key Performance Indicator by which strategic priorities are determined.