Multi-Unit Strategies - Use cost-savings firms to review expenses

By: Carty Davis
Published: January 14th, 2020

Though the U.S. economy has been under the longest expansion period in history, there will come a point where growth slows, and yes, even a recession will return.

Such an economic downturn will undoubtedly affect the more than 759,000 franchise businesses contributing $451 billion to the U.S. GDP. While many franchise leaders are taking a cautious approach toward the upcoming economic cycle, there are things franchisees can do to better position their business for such a downturn.

Investment banker Carty Davis recently wrote about what franchisees can do now to prepare for a turn in the economy. Here’s what he says about how cost-savings firms can help business owners save money.

• Engage a cost-savings firm. Cost-savings firms review business expenses and contracts to determine where owners can save money. These firms review such costs as electricity, gas, insurance, bank fees, trash disposal, and service fees. By engaging such a firm, QSRs, for example, can typically save between $200 and $400 or more per unit per month. Even small savings can add up considerably over time, which can improve profitability during a downturn. Cost-savings firms generally share in the savings over a set period of time and generally don’t charge up-front fees. While finance executives may be reluctant to admit they missed a cost-savings opportunity, it’s important to remember that it’s difficult to monitor every opportunity. The best CFOs engage third parties to help improve the financial performance of their business.

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