Essay: Analysis and Recommendation Cold Stone Creamery Franchise

Sample Essay

The financial plan for Cold Stone Creamery franchise presents the relevant information which would enable the investor to evaluate the investment decision and accept or reject the business proposal. The financial plan includes various aspects of the franchise such as the startup plan, sales forecast, profit and loss expectations, break even analysis and estimation of payback period. The startup plan of the company indicates that the total amount required to setup and start the franchise is $438,850 which will be used in acquiring assets necessary for operating the business effectively and efficiently. The startup plan includes the various individual amounts required for setting up the business including the initial franchise cost.

Sales forecast of the franchise displays the estimated level of sales in the initial years of the business while the estimated profit and loss section covers the amount of profit generated by the franchise based on the sales forecast. The estimated net income for the franchise is $83,622, $89,040 and $94,783 for years 1, 2 and 3 respectively. The two important sections of the financial plan are the break even analysis and payback period sections which provide a basis for making an investment decision. The break even analysis of the firm indicates that it needs to sell at least 36,475 per year to breakeven while the expected sales for year 1 are well beyond this level which means the company would start earning profits in the first year of business. The payback period section of the plan indicates that the amount invested initially to start the business would be recovered in 4.1 years or at the start of the fifth year. The final recommendation for opening this franchise is positive as the evaluation carried out in the financial plan indicates a profitable and viable business opportunity.

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