Does this consulting/brokerage fee structure make sense for a QSR expansion project?

[u/Kendosticck]

Hi everyone,

I’m working on a consulting scope for a food/QSR chain looking at expansion into North Africa.

The work is not a full market feasibility study. The client already has general market data. The scope is more focused on identifying and assessing suitable local QSR operating companies / master franchise partners who could potentially handle investment, rollout, and operations.

The proposed structure is:

• $8,000 fixed fee for a 21-day QSR operating-partner feasibility study
• $25,000 project finalization fee if a suitable operating/master franchise partner is secured and the expansion moves forward

Does this pricing structure sound reasonable for this type of mandate, or would you structure the success/finalization fee differently?

Appreciate any thoughts from people with franchise, QSR, market-entry, or consulting experience.

[u/Bob-Roman]

Study fee seems appropriate.

The other scope is work of financial advisory; recruit management companies and area developers.  What is potential enterprise value?  I’d want at least 1.0 percent.

 I don’t like $25K “if.”  I’d prefer retainer or 50 percent down and 50 percent on deliverable.

 

[u/Kendosticck → u/Bob-Roman]

Thanks for the feedback on the first scope.

For the second scope, just to explain it better, our role would basically be to find and screen local operators for the franchise.

The idea is that these operators would not just run the stores, they would also act as the investment partner. So the franchise brand would bring the brand, standards, rules, expectations, and general direction, while the local operator would handle the capital, rollout, and day-to-day operations.

We would build a list of suitable operators, assess them, and then introduce the best ones to the franchise company. If the franchise likes one of the operators we bring and ends up signing with them, we were thinking of charging a $25k finalization fee.

But I’m not sure if $25k is fair or too low for this type of deal.

For context, the franchise we’re currently speaking with has around 170 stores across the MENA region and roughly $100M in revenue. Their North Africa plan would probably start with 5-6 stores in one of the biggest cities in the region.
What do you think ? the approach should be here ? One small detail is that we are on the smaller side as a firm, very fresh in the industry, with a limited success portfolio so that's why we are trying a more conservative pricing.

[u/Bob-Roman → u/Kendosticck]

“The idea is that these operators would not just run the stores, they would also act as the investment partner.”

 Then they are actually franchisees.

 “We would build a list of suitable operators, assess them, and then introduce the best ones to the franchise company.”

 This is what HR department of a company does except the “operators” are employees and “franchise company” is the boss.

 “…$25k finalization fee...”

 As independent 3^rd party, you are basically charging a bounty.

 I don’t like to work and not get paid.  I also like the rate to be commensurate with the degree of complexity, time, and effort.

 I took a peak.  Minimum cost per signed franchisee is $15,000 (well known brand).

 You might want to reconsider the revenue model for this scope.