Calculating Your Breakeven Point as a New Franchise Owner

Knowing your breakeven point—the moment your revenue covers all expenses—is key to planning and managing cash flow.

Identify Fixed Costs
These include rent, salaries, insurance, and monthly loan payments. They stay the same regardless of sales.

Identify Variable Costs
Costs like inventory, supplies, and royalties vary with sales volume.

Calculate Breakeven
Use this formula:

Breakeven Sales = Fixed Costs ÷ (1 – Variable Costs % of Sales)

Example: If fixed costs are $10,000 per month and variable costs are 40% of sales, your breakeven sales would be $16,667/month.

Why It Matters
Breakeven analysis helps set realistic sales goals and determines how much working capital you’ll need in the early months.

Takeaway: Track your breakeven monthly and adjust as costs or sales shift—small changes can have a big impact.

Have questions about franchise ownership OR franchising your existing business? Please feel free to reach out to me at JoeFox@TheFranchiseConsultingCompany.com or (713) 936-4929. I am a Senior Franchise Consultant with over 30 years of business experience. My services are free and I'm here to help.

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