Franchisee Unit P&L Model
This use case explains how to build a franchisee unit P&L model in Model Reef.
You will:
Represent each franchise site or unit in the branch structure.
Model site level revenue using volume, price and mix drivers.
Model site level costs for staff, rent, marketing and supplies.
Include royalties, marketing levies and network fees at unit level.
Connect unit P&Ls to network wide reporting and valuation.
Model Reef is not a point of sale or store back office system. It uses aggregated commercial and cost drivers to derive financial statements, cashflows and scenarios.
When to use this pattern
Use this pattern when:
You are a franchisor needing a standard unit economics model.
You are a franchisee or advisor analysing individual site performance.
You want to compare sites with consistent logic and input structures.
You need a template that can scale to tens or hundreds of units.
It is a foundation for:
Royalty and Fee Revenue Model
Territory Rollout Planning
Network Level Consolidated Reporting
Build a Multi Division Model
Architecture overview
Franchisee unit P&L modelling uses:
Structure
Branches for each unit, store or territory.
Parent branches for regions and the overall network.
Revenue drivers
Foot traffic, conversion and basket size.
Average selling price and product mix.
Seasonality and promotions.
Cost drivers
Staff rosters and wage assumptions.
Rent and occupancy costs.
Cost of goods, supplies and wastage.
Local marketing and other operating expenses.
Franchise related items
Royalties as a percentage of sales.
Marketing levies or co op funds.
Fixed network fees or minimum royalties.
Create branches for units and regions
In the branch tree, create a structure like:
Network
Region - North
Unit - Store 001
Unit - Store 002
Region - South
Unit - Store 010
Unit - Store 011
Each Unit branch will hold that site’s revenue and cost variables. Regions and the Network branch provide consolidated views.
You can also create scenario sets of the same structure for different operating models or pricing settings by duplicating models.
Build unit level revenue drivers
For each unit, decide which revenue pattern fits best. Common patterns are:
Volume based
Transactions per day or week.
Average transaction value.
Seasonality factors by month or week.
Capacity based
Seats, rooms or service capacity.
Utilisation and pricing per session or period.
Create drivers in the Data Library, for example:
Foot Traffic per day.
Conversion percentage.
Average Items per Ticket.
Average Selling Price.
Define unit Revenue variables such as:
Revenue - Store 001 - Core Sales.
Revenue - Store 001 - Add on Sales.
Use formulas such as:
Revenue = Volume × Price × Seasonality.
Keep pricing and volume drivers central in the Data Library so changes can be pushed across multiple units where appropriate.
Model unit level direct costs and staff
Create COGS and Staff variables for each unit, for example:
COGS - Store 001 - Food and Beverage.
Staff - Store 001 - Front of House.
Staff - Store 001 - Back of House.
For COGS, you can use:
Percentage of sales by category, or
Unit cost per item multiplied by volume.
For Staff, define:
Headcount per role.
Wage rate and on costs.
Roster pattern and timing.
Payment delays to suppliers and staff.
These variables will populate site level gross margin and staff cost in the P&L.
Add rent, occupancy and local operating expenses
Create Opex variables for each unit, for example:
Opex - Store 001 - Rent.
Opex - Store 001 - Utilities.
Opex - Store 001 - Local Marketing.
Opex - Store 001 - Repairs and Maintenance.
For rent, you may have:
Fixed monthly base rent.
Percentage rent above a sales threshold.
Scheduled rent increases.
For other costs, use drivers such as:
Cost per square metre.
Cost per unit of revenue.
Known annual agreements spread over periods.
This gives each unit a full operating cost profile below gross margin.
Include royalties, levies and franchise fees at unit level
At each unit, create Opex variables for franchisor related charges, such as:
Opex - Store 001 - Royalty Fee.
Opex - Store 001 - Marketing Levy.
Opex - Store 001 - Fixed Franchise Service Fee.
Typically, royalties and levies are expressed as:
Royalties = Royalty Percentage × Eligible Sales.
Marketing Levy = Levy Percentage × Eligible Sales.
Where minimums apply, you can use formulas based on the greater of a fixed amount and a percentage applied to sales. If you want to keep pure arithmetic, approximate minimums via conservative percentages or separate adjustment variables.
These costs will appear in unit P&L but represent income at the franchisor network level in separate branches or models.
Connect units to network wide reporting
By placing unit branches under regional and network parents, Model Reef will automatically:
Aggregate unit P&Ls into regional and network P&Ls.
Roll up Balance Sheet and Cashflow contributions.
Feed consolidated outputs into dashboards and valuation.
You can filter reports by:
Unit.
Region.
Network total.
Mature versus new stores.
Company owned versus franchisee owned if you model both in the same structure.
This supports consistent performance measurement and benchmarking.
Use scenarios for pricing, staffing and rent tests
Clone the base model to create scenario models for:
Different pricing strategies.
Changes in wage rates and rosters.
New rent or lease terms.
Alternative operating hours.
Local marketing spend and promotion strategies.
In each scenario, adjust unit drivers and compare:
Unit and network level EBITDA.
Cashflow and payback for new units.
Sensitivity of performance to key assumptions.
Valuation impacts where relevant.
Check your work
Unit revenue and cost patterns match historical data for sample sites.
Rent, staffing, and royalty structures reflect franchise agreements.
Aggregated network results reconcile with accounting reports for recent periods.
Scenario results are intuitive for both franchisor and franchisee stakeholders.
Troubleshooting
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