<{$xoops_sitename}>

If it appreciates
…buy it,

If it depreciates
…lease it!

~ J. Paul Getty

McDONALD'S CASE STUDY #7

Felix* is a great guy - a real hardworking licensee.  When he became a licensee he was allocated an existing low sales volume store.  Despite hard work his SOI was very modest and he was not receiving the profits he deserved.

The Company, in recognising his efforts, offered him a store with considerable potential for sales growth in an expanding area, although initial sales assumptions were still quite modest.  Felix engaged us to arrange funding for the equipment and fitout of the new store.  However, on closely examining his cash flow projections, it was apparent that he would have to fund initially on an "interest only" basis for say, the first three years, until the anticipated demographic expansion took effect. 

Having discussed the situation with Felix's accountant, we recommended that he make arrangements with his bank for a three year "interest only" commercial bill to fund the equipment package for the new store.  Hopefully, after that time, his cash flow position would be much healthier and he could then consider debt reduction.

Four years later we arranged funding for the entire equipment package for Felix's second store together with a new drive thru facility for his original store.  It is pleasing to note that Felix is now in a sound cash flow position and has a strong focus on debt reduction.

The moral to this story is: 

If you can't make a sale, at least make a friend.

Comment:

Enterprise Finance is available at all times to discuss finance requirements and to make recommendations as to the most appropriate course of action, which in the short term may not involve a funding opportunity for Enterprise Finance.

Why not call for a chat?

*Real name changed to protect privacy. 

Recommend this page to a friend! Prepare to print
 
 
© 2009 Enterprise Finance Pty Ltd    |   Created by InhouseMAD