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Franchise: Profit and Loss Statements

Reasons You Need Profit and Loss Statements in Your Franchise Business:

As a Franchisor, profit and loss statements:

1. Provide you with a uniform electronic monthly comparison of your franchisees' financial statement data

2. Allow you to understand the financial condition of your franchise community as it relates to:

• Profitability
• Capital investment
• Sales trends
• Marketing profitability effectiveness
• Geographic cost comparisons

3. Allow you to make growth eligibility decisions about your existing franchisee applicants

4. Allow you to be proactive about your franchise community profitability

5. Keep you current with your lending requirements and future borrowing needs

As a Franchisee, profit and loss statements:

1. Provide you with a true financial measurement of your business on a monthly basis

2. Provide you with required information for proper tax planning throughout the year with your franchise accounting firm

3. Allow your franchisor to make proper decisions about your ability to grow your franchise

4. Keep your lender covenants current

5. Are required to determine store level bonus based on profitability

6. Are required to buy or sell your business - you are unable to do so without current financial information

7. Allow you to determine the basic value of your business each month