Looking for an athletic shoe store franchise business plan? You're in the right place.
A franchised shoe store pays the franchisor before it sells a pair. How much goes out in fees and royalties? How much stock does the opening buy need? What do youth, team and fit-service sales add in a town where summer heat slows adult running? A blank template won't show what a workable answer looks like.
In this article we'll walk through a complete sample plan for a franchised athletic shoe store in Coral Springs, Florida, section by section, so you can see how royalties, rent, payroll and inventory fit together before you write your own. We'll cover the executive summary, the SWOT analysis and, in particular, all of the financials.
Here's what you'll take away:
- The executive summary: see how to put a franchise fee, a lease and a bank loan on one page so a lender can read the ask quickly
- The franchise terms: learn how to show royalty and brand-fund costs as lines in the forecast and where to hedge what only the disclosure document can confirm
- The product mix: find out how adult running, youth, team and accessory lines each earn a different margin
- The inventory ratios: read stock turns, gross profit per dollar of inventory and sales per square foot, the figures a retail lender checks
- The five-year profit, cash flow and balance sheet: understand how fees, rent and stock decisions appear in the numbers
- The downside case: have an answer ready for "what if sales run 20% short?", along with the steps the owner takes in response
If you're buying into a footwear or sporting-goods franchise, read this before you write your own. The store is fictional, so take what fits your system and change the rest.
In this plan
- Pine Ridge Athletic Opens as a Franchised Unit
- Franchise Terms and the Entity
- Coral Springs and the Running Calendar
- The Buyer in the Door
- Fitting, Teams and Pricing
- Local Marketing Beside the Brand Fund
- Inside the Store Week to Week
- Dana Whitfield and the Store Team
- Financial Plan: Franchise Fees, Inventory and the Bank Loan
- Franchise fee, opening stock and the $570,000 raise
- Store and franchise figures behind the forecast
- Revenue by product family
- Who is on the floor
- Profit and loss, with royalty and brand fund
- Cash movements
- Balance sheet with stock and supplier credit
- Stock turns, sales per square foot and break-even
- A soft market: sales 20% under plan
- Sources
Looking for a athletic shoe store franchise business plan template? The Toolkit builds yours with your own numbers.
Pine Ridge Athletic Opens as a Franchised Unit
Pine Ridge Athletic is a franchised athletic shoe store that opens in 2,700 square feet of a neighborhood shopping center in Coral Springs, Florida, in January 2027. It sells adult running and walking shoes, youth and school-sport shoes, court, field and training shoes, accessories and team orders, under a brand system that supplies the store format, vendor list and point of sale. Dana Whitfield, the owner-operator, holds 55% of the LLC and a minority investor holds 45%.
The store raises $570,000: $320,000 of equity and a $250,000 bank term loan. The money is split four ways: opening stock $160,000, build-out with fixtures and gait-analysis kit $117,000, a $93,300 block for the $40,000 franchise fee plus registrations, legal work, training, pre-opening rent and the grand opening, and a $199,700 cash reserve.
| Year 1 | Year 2 | Year 3 | |
|---|---|---|---|
| Revenue | $909,790 | $1,141,148 | $1,293,163 |
| Net income after start-up costs | ($143,608) | $7,829 | $28,652 |
| Closing cash | $150,030 | $150,602 | $171,193 |
Year 1 ends in the red. Franchise costs, a full floor team and a year of rent all land before the customer list has had time to grow, though EBITDA turns positive every month from July through December. Profit arrives in Year 2 and holds through Year 5.
With sales 20% under plan, the owner delays hiring, trims marketing and her own pay, buys less opening stock and pays no distributions. Cash stays positive in every year, though equity falls to about $68,000 by the end of Year 3. Operating profit does not cover the loan payments in any year of that case, and the bank would have to agree some relief if it lasted past Year 5.
A franchise store has to earn its royalty. Net income is 2.2% of revenue in Year 3 and 2.1% in Year 5, after Dana's own $52,000 salary. The margin is thin: the store leans on fit services and a right-sized unit rather than on aggressive sales per square foot, and it does not reach the 8% a healthier retailer would aim for. The system supplies brand access, vendor terms and a tested layout. The owner supplies fit expertise, a following among local runners and school teams, and the discipline to keep stock turning.
Franchise Terms and the Entity
Legal name: Pine Ridge Athletic, LLC, a Florida LLC taxed as a corporation. Owners: Dana Whitfield, 55%; a minority investor, 45%. Premises: 2,700 square feet of in-line retail space in a neighborhood shopping center. Opening: January 2027. Stage: pre-opening, with the franchise agreement and lease in counsel's review and a bank commitment in hand, subject to the signed lease.
What the agreement costs
The agreement runs ten years. It carries a $40,000 initial fee, a royalty of 4.5% of gross sales, a brand advertising fund of 1% and a local marketing minimum of 1% of sales. These are example figures, and the plan does not state protected territory, the system's reported unit earnings or its closure record; those come from Items 12, 19 and 20 of the disclosure document, which the lender will ask to see. A real franchisor sets its own fee, royalty base, renewal and transfer terms, and the buyer's lawyer reads them before anything is signed.
Product lines and what each earns
| Line | How it earns | Year 1 share of revenue |
|---|---|---|
| Adult running and walking shoes | About 3,100 pairs at an average of $148 | 50% |
| Youth and school-sport shoes | About 1,380 pairs at $78 | 12% |
| Court, field and training shoes | About 950 pairs at $99 | 10% |
| Socks, hydration and apparel | About 4,600 sales at $28 | 14% |
| Team, club and school-program pairs | About 650 pairs at $70 | 5% |
| Gait-fit service, custom insoles and shoe care | About 1,250 sales at $60 | 8% |
Goals to the end of Year 2
- Revenue of $1,141,148 in 2028 and a profit after tax.
- Stock turning 2.6 times a year on year-end inventory, up from 2.2.
- Team and school programs signed with a dozen local clubs and schools.
- The bank's interest-only year ended in January 2028 with the loan serviced on schedule.
Tax and registrations
Florida charges a corporate income tax of 5.5%, which the plan applies alongside the federal rate. The store registers with the Florida Department of Revenue to collect sales tax at the combined state and county rate, which may change. It confirms any city or county business tax receipt before opening, opens employer accounts and carries workers' compensation for every employee.
Coral Springs and the Running Calendar
A suburban market built around families and races
Coral Springs is a large suburban city in northwest Broward County. The plan treats it and its neighbors as a market of families with school-age children, adult runners and walkers, and people on their feet at work. Winter brings cooler, drier mornings and seasonal residents, so January to March carry the strongest adult running sales of the first half-year. Summer heat slows training, and July and August revenue comes from back-to-school and league registration instead.
Margin after the franchise costs
Specialty footwear stores buy at a margin and give part of it back in markdowns, shrinkage and card fees. Pine Ridge Athletic's blended gross margin is 50.1%, helped by a fit, insole and shoe-care line that earns 62%. After royalty, brand fund, card fees, markdowns and shrinkage, about 39 cents of each sales dollar is left to pay for people, rent and overhead. Rent is 10.7% of Year 1 revenue and 8.0% by Year 3.
Pay on the floor
Hourly staff are paid between $15.87 and $16.11 an hour at launch, set above Florida's minimum wage, which steps up each September. The owner confirms the local going rate for retail sales staff against Bureau of Labor Statistics data for the Miami-Fort Lauderdale area before hiring.
Other places a customer could buy
| Alternative | What it offers | Why a customer might choose it | How Pine Ridge Athletic differs |
|---|---|---|---|
| Independent running specialty stores | Gait analysis and fit advice | Expertise and a running-club following | The same fit process, plus youth and team programs under one roof |
| National sporting-goods chains | Broad range, promotions | Convenience and sale prices | Narrower stock chosen for fit, with a staff member who measures both feet |
| Department stores and mall shoe chains | Mainstream brands | A stop on a mall trip | Performance footwear with a fitting process |
| Online footwear retailers | Very large range, free shipping offers | Price and choice | In-person fitting and same-day exchange |
| Brand-owned outlets | One label, deep range | Discounts on a single brand | Several brands on one wall, chosen for fit |
The table sets out what each alternative offers and how the store positions itself. It is not a ranking, and no prices are quoted because each retailer publishes its own.
Strengths and exposures
| Strengths | Weaknesses |
|---|---|
| Owner with nine years in running-shoe retail | Royalty and brand fund take 5.5% of sales before any cost of running the store |
| Brand access, vendor terms and a tested layout | Site, remodel schedule and vendor list set by the franchisor |
| Youth and team lines that fill the summer | Year 1 loses money and draws on the reserve |
| Opportunities | Threats |
|---|---|
| Families with children in school sports | Online retailers and brand-owned outlets |
| A race calendar that runs most of the year | A weak back-to-school season |
| Fit services that online sellers cannot match | A rival unit or independent in the same center |
The Buyer in the Door
Four buyers, by share of Year 1 pairs
| Buyer | What the buyer needs | Share of Year 1 pairs |
|---|---|---|
| Recreational and race runners | A training shoe fitted to gait and mileage | 40% |
| School and club athletes | Cleats, court shoes and trainers before a season | 30% |
| Walkers and people on their feet at work | Cushioning that lasts a shift | 20% |
| Casual and fashion buyers | A current look in a comfortable shoe | 10% |
Why a buyer would switch
A gait check that takes about fifteen minutes, a staff member who explains the difference between two shoes, and an exchange policy that covers a shoe tried on a short run. Parents switch for a coach's team discount.
From pairs to customers
At 1.2 pairs per customer, 6,080 pairs is about 5,100 customers in Year 1, 6,200 in Year 2 and 6,800 in Year 3. Year 1 revenue per customer is about $180. The store expects 45% of each later year's customers to be returning buyers.
Fitting, Teams and Pricing
The fit
Every adult running customer is offered a fit at no charge: a foot measurement, a short treadmill run on camera and a look at the wear on the current pair. The associate brings two or three shoes and the customer runs in each. The fit costs nothing; what it earns is the sale of the right shoe at the brand's recommended retail price and, for about one customer in four, a heat-molded or custom insole or shoe care at about $60 on top.
Team and school programs
League and school programs get a discount of about 10% and a share of sales back to the organization. Team pairs are 5% of Year 1 revenue and carry the thinnest margin, but they bring parents into the store at the start of a season. The store expects 650 team pairs in Year 1 and 940 in Year 3.
Price ladder and returns
Shelf prices follow the brands' recommended retail prices. Adult running shoes run from about $90 to $200. Older models are marked down after 90 and 150 days, and the plan budgets 2% of sales for markdowns beyond the planned margin. Unworn pairs may be returned within 30 days.
Replacement reminders
The point-of-sale system keeps each customer's size and model. A text goes out at about six months suggesting a check on wear, and the store expects 45% of customers to return in a year.
Local Marketing Beside the Brand Fund
What the Year 1 budget buys
The Year 1 budget is $30,000: $16,000 of launch spend from start-up capital and $14,000 of running cost, which is 1.5% of Year 1 revenue. The brand advertising fund takes another $9,098 of sales, which the franchisor spends on regional campaigns. Over about 5,100 Year 1 customers, local running cost is about $2.80 each.
| Channel | Year 1 spend | What it is expected to do |
|---|---|---|
| Grand-opening program (launch) | $9,000 | The franchisor's opening campaign: a week of events and local media |
| Local launch (launch) | $4,500 | Banners, run-club tie-ins and neighborhood mailers |
| Community partner kickoff (launch) | $2,500 | Meetings and sample programs with schools and clubs |
| Local search and the brand's store locator | $2,500 | "Running shoe store Coral Springs"; about 900 customers |
| Instagram and Meta ads | $4,800 | New-shoe launches and season campaigns; about 450 customers |
| Weekly group run and race sponsorships | $2,500 | A Saturday group run and a few 5K sponsorships; about 700 customers |
| School and club partnerships | $2,000 | Coach and parent offers; about 700 customers |
| Email and text list | $1,200 | Replacement reminders and season notes; about 400 customers |
| Local print and direct mail | $1,000 | Postcards to school families in August; supports the school and club line |
Shopping-center traffic and word of mouth add about 1,650 customers with no direct cost, and brand fund campaigns about 300, which makes the Year 1 total about 5,100.
Marketing milestones
- January 2027: store open, about 300 sign-ups from the opening month.
- March 2027: first race season, with a group run every Saturday.
- August 2027: peak month at $105,036, tested against the buying plan.
- December 2027: about 5,100 customers served in the year.
Inside the Store Week to Week
The unit
The lease covers 2,700 square feet. All-in occupancy of roughly $36 per square foot comes to $97,200 in Year 1 and $109,400 by Year 5. The lease runs ten years with renewal options and a personal guarantee, matching the franchise term. Rent rises 3% a year. About 1,900 square feet is sales floor with a fitting zone and a treadmill alcove; the rest holds the stockroom and receiving.
Hours and cover
Open seven days a week, about 359 days a year and 67 hours a week. Two people are on the floor most of the day, with a third at peak times. Saturdays, the August back-to-school weeks and the holiday weeks carry the heaviest cover, with the weekend and seasonal associates added.
The buying year
- Opening assortment: ordered in October and November 2026 once the loan commitment is signed.
- Spring running: ordered in October, delivered January and February.
- Back-to-school and fall sport: ordered in April and May, delivered in June and July.
- Holiday and gift: ordered in August, delivered October.
- Core replenishment: weekly, from the vendors on the franchisor's list.
Inventory opens at $160,000 and ends Year 1 at $205,354 as the August and fall buys land.
Dependence on the franchisor
The franchisor supplies a vendor list with agreed terms, a point-of-sale system, a brand fund and quarterly field visits. In return the store follows the franchisor's layout, assortment and pricing guidance, and may not buy outside the approved vendors. If a key brand changes its terms, the store's assortment and margin change with them, and the accessory and team lines are the cushion.
Systems and insurance
A point-of-sale system with size-level inventory, the franchisor's technology package, a text-messaging tool and cloud accounting cost $6,000 in Year 1. Insurance of $11,000 covers general liability, property and business interruption, with key-person cover on the owner. Card data goes through a terminal that does not store card numbers.
Dana Whitfield and the Store Team
The owner-operator
Dana has nine years in running-shoe retail in Fort Lauderdale. She started as a sales associate at a regional running specialty chain, became a lead fitter in her third year and a store manager in her sixth. She holds a bachelor's degree in business. Her $175,000 is household savings and brokerage holdings built over those years.
What she has not done before
Dana has not signed a ten-year lease or a bank guarantee and has not run a profit and loss in her own name. A lawyer reviews the franchise agreement and lease, a part-time bookkeeper keeps the books, and an outside accountant reviews the cash forecast each quarter.
Team and cover
The assistant manager joins at launch, runs the fitting process and covers days when Dana is away. A part-time fit specialist, two part-time sales associates and a weekend associate fill the schedule, with seasonal associates in July and August and in November and December. A full-time associate joins in month 20 and a part-time stock and events coordinator in month 46. The franchisor's field support can cover ordering during a long absence, and the store carries key-person life and disability cover on Dana.
Advisers
An accountant who reviews the numbers each quarter and files the tax returns, a franchise lawyer on call for the agreement and transfer terms, and the Florida Small Business Development Center network for pricing and marketing questions.
Ownership and the bank
Dana owns 55% of Pine Ridge Athletic, LLC and the minority investor 45%. Both give the bank a personal guarantee, and the franchise agreement is assigned to the lender as collateral where the franchisor permits it. The loan carries a covenant to deliver quarterly accounts and a monthly inventory report. The bank takes a lien on inventory and fixtures, which would fetch well below cost in a forced sale. The model charges corporate tax rates throughout, and an accountant advises on whether a pass-through election suits the owners better.
Financial Plan: Franchise Fees, Inventory and the Bank Loan
A lender reading a franchise plan looks for three things: what goes to the franchisor before a pair of shoes is sold, how much stock the shelves need, and what is left each month after royalties and rent. The sections below take those in order, then the sales forecast, payroll, profit and loss, cash, the balance sheet and a downside case. The first year is monthly and later years are annual.
Franchise fee, opening stock and the $570,000 raise
| Use of funds | Amount |
|---|---|
| Opening inventory from the franchisor-approved vendor list: about 260 styles, with depth in core sizes of the 80 best sellers | $160,000 |
| Build-out to brand spec (about $30 a square foot after a landlord allowance, 2,700 square feet): flooring, wall systems, fitting zone, treadmill alcove | $81,000 |
| Fixtures, treadmill and gait-analysis kit, point of sale, signage | $36,000 |
| Initial franchise fee (figure from the plan; set in the franchise disclosure document) | $40,000 |
| Business tax receipt, state registrations, sign permit | $1,800 |
| Franchise and lease review by counsel, accountant set-up | $8,500 |
| Franchisor training travel, pre-opening staff training and pre-opening rent | $27,000 |
| Grand-opening program required by the franchisor, plus local launch | $16,000 |
| Cash reserve for the slow summer and the August back-to-school buy | $199,700 |
| Total uses | $570,000 |
| Source of funds | Amount |
|---|---|
| Dana Whitfield's savings and brokerage holdings | $175,000 |
| Minority investor (a former running-club partner) | $145,000 |
| Bank term loan | $250,000 |
| Total sources | $570,000 |
The store raises $570,000. Dana Whitfield puts in $175,000 and a minority investor $145,000, which together are 56% of the total. A bank lends $250,000 over ten years at 10.5%, interest-only for the first twelve months, on terms of the kind the SBA 7(a) program supports. Whether the lender uses a guarantee is its decision, and the rate is a planning figure rather than a quote. The $40,000 franchise fee is expensed at opening in the model, although an accountant may capitalize it over the ten-year agreement. Opening inventory is $160,000, the build-out, fixtures and gait kit $117,000, and the cash reserve $199,700. The reserve is large on purpose: it carries the store through a loss-making first half-year, funds the stock that builds up before the August and holiday buys, and keeps the downside case at the end of this section above zero.
Store and franchise figures behind the forecast
- The store sells 6,080 pairs in Year 1: 3,100 adult running and walking pairs at an average of $148, 1,380 youth and school-sport pairs at $78, 950 court, field and training pairs at $99 and 650 team and club pairs at $70. It trades 359 days, so Year 1 averages 17 pairs a day and Year 3 about 23. Prices rise 3% a year from Year 2. Pairs reach 8,160 in Year 3 and 8,870 in Year 5.
- A footwear customer buys about 1.2 pairs, which gives roughly 5,100 customers in Year 1, 6,800 in Year 3 and 7,400 in Year 5. Socks, hydration gear and apparel add 4,600 sales at $28 in Year 1, 14% of revenue. A fit and care line adds 1,250 sales at an average of $60 (heat-molded and custom insoles, plus shoe care), 8% of revenue at a 62% margin; about one footwear customer in four buys from it, and that share is held at 25% to 26% in every year. Year 1 revenue per footwear customer, accessories and services included, is about $180.
- Cost of goods is 51% of price for adult shoes, 52% for youth and court shoes, 45% for accessories, 38% for the insole and care line and 62% for team pairs, which blends to a 50.1% gross margin in every year. Team pairs carry the thinnest margin because the program discount is built into the price. Under gross profit come five sales-linked charges: royalty at 4.5%, the brand advertising fund at 1%, card fees at 2.3%, markdowns beyond the planned margin at 2% and shrinkage with damaged returns at 1%. Those five lines take 10.8 cents of each sales dollar and leave about 39 cents before people, rent and overhead.
- The franchise terms in this plan are example figures for a ten-year agreement. A real franchisor sets its own fee, royalty base, advertising contribution and renewal terms in its disclosure document, which federal rules require it to hand over at least 14 calendar days before the buyer signs or pays anything. Florida has its own franchise statutes, so a franchise lawyer reviews the agreement before the lease is signed.
- The 2,700-square-foot unit sits in a neighborhood shopping center. Occupancy is priced at roughly $36 per square foot per year including common-area charges, so Year 1 rent comes to $97,200: 10.7% of Year 1 revenue, falling to 8.0% in Year 3. After 3% annual bumps rent is $109,400 in Year 5, about $41 a square foot. The franchisor approves the site and asking rents differ by center, so the figure is tested against the actual lease. Sales per square foot are $337 in Year 1, $479 in Year 3 and $550 in Year 5. That is a 63% rise on Year 1 and rests on a larger ticket and on the fit line, not on more foot traffic; the system's own unit sales in the disclosure document are the check.
- Inventory opens at $160,000, about 2,100 pairs at cost, and ends Year 1 at $205,354 as the August back-to-school and fall buys arrive, then $234,059 at the end of Year 5. Dividing cost of goods by year-end stock gives 2.2 turns in Year 1, 2.9 in Year 3 and 3.2 in Year 5. Brands and distributors allow 30 days, so $37,277 is still owed to them when Year 1 closes. Receivables are two days of sales, almost all card settlements.
- Payroll adds 27% to wages for payroll taxes, workers' compensation and health cover (15% for part-time staff). Florida's minimum wage is set to rise each September under a 2020 constitutional amendment, so hourly pay is set above the state floor: the lowest rate is about $15.87 an hour and the full-time associate's $33,500 works out to $16.11. The owner confirms the current floor with the Florida Department of Commerce every September. The wage figures in the staffing table are launch rates. A 3% yearly raise is booked on its own line starting in Year 2.
- Year 1 marketing totals $30,000. The grand opening and launch push takes $16,000 out of the raise, and the remaining $14,000 is paid from trading, equal to 1.5% of Year 1 revenue against a franchise minimum of 1%. The brand fund adds $9,098. Per customer, running cost is about $2.80 and all marketing including launch and fund is about $7.70. Professional fees of $14,000 cover a part-time bookkeeper at about $500 a month, the accountant's quarterly reviews and returns, and a small legal retainer. Insurance is $11,000 in Year 1.
- The LLC elects corporate tax treatment, so the model charges the 21% federal rate plus Florida's 5.5% corporate income tax. An owner who elects pass-through treatment would pay differently, and the accountant advises on that. Sales tax collected from customers at the combined state and county rate is remitted and is not revenue; the rate may change and is confirmed with the Florida Department of Revenue.
- Nothing is paid out to the owners. Retained earnings are still about $37,500 below zero after Year 5 and the loan runs its full term, so any cash the store builds stays in the business. Separately, the Year 5 expense line carries an $18,000 contribution to the remodel the franchise agreement requires at that point.
Revenue by product family
| Revenue stream | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Adult running and walking shoes | $458,800 | $579,272 | $651,605 | $695,411 | $741,260 |
| Youth and school-sport shoes | $107,640 | $130,151 | $148,950 | $161,942 | $173,824 |
| Court, field and training shoes | $94,050 | $117,266 | $133,387 | $143,879 | $154,881 |
| Socks, hydration and apparel | $128,800 | $155,736 | $176,746 | $192,757 | $203,267 |
| Team, club and school-program pairs | $45,500 | $59,843 | $69,807 | $77,256 | $82,725 |
| Gait-fit service, custom insoles and shoe care | $75,000 | $98,880 | $112,668 | $121,293 | $129,659 |
| Total revenue | $909,790 | $1,141,148 | $1,293,163 | $1,392,538 | $1,485,616 |
| Growth on prior year | – | 25% | 13% | 8% | 7% |
Adult running and walking shoes are 50% of Year 1 revenue and stay near 49% through Year 5. Youth and school-sport shoes are 12%, court, field and training shoes 10%, socks, hydration gear and apparel 14%, team pairs 5% and the fit, insole and shoe-care line 8%. The adult line carries the store, so a weak spring running season shows up quickly in cash. The youth and team lines work differently: July and August together bring 20% of Year 1 revenue, mostly from back-to-school buying and league registration.
Month by month in the first year
| Month | Adult running and walking shoes | Youth and school-sport shoes | Court, field and training shoes | Socks, hydration and apparel | Team, club and school-program pairs | Gait-fit service, custom insoles and shoe care | Total revenue | EBITDA |
|---|---|---|---|---|---|---|---|---|
| Jan 2027 | $31,524 | $3,588 | $4,455 | $7,476 | $1,190 | $4,320 | $52,553 | ($12,529) |
| Feb 2027 | $34,632 | $3,900 | $5,247 | $8,204 | $2,030 | $4,800 | $58,813 | ($9,390) |
| Mar 2027 | $40,996 | $5,538 | $7,524 | $9,716 | $3,920 | $5,640 | $73,334 | ($2,108) |
| Apr 2027 | $34,040 | $5,850 | $7,821 | $9,016 | $3,290 | $5,220 | $65,237 | ($6,168) |
| May 2027 | $30,932 | $4,602 | $6,435 | $8,176 | $1,750 | $4,740 | $56,635 | ($10,482) |
| Jun 2027 | $29,156 | $5,226 | $5,643 | $7,728 | $1,330 | $4,500 | $53,583 | ($12,013) |
| Jul 2027 | $35,520 | $15,288 | $7,821 | $9,436 | $5,600 | $5,520 | $79,185 | $826 |
| Aug 2027 | $42,476 | $22,698 | $11,286 | $11,956 | $9,660 | $6,960 | $105,036 | $13,791 |
| Sep 2027 | $38,628 | $10,686 | $9,603 | $10,976 | $6,090 | $6,420 | $82,403 | $2,440 |
| Oct 2027 | $44,252 | $9,516 | $8,514 | $11,704 | $4,550 | $6,840 | $85,376 | $3,931 |
| Nov 2027 | $55,204 | $10,686 | $10,692 | $14,644 | $3,570 | $8,520 | $103,316 | $12,928 |
| Dec 2027 | $41,440 | $10,062 | $9,009 | $19,768 | $2,520 | $11,520 | $94,319 | $8,416 |
January opens at $52,553 of sales. March reaches $73,334, June slips to $53,583 and August tops the year at $105,036. The second half carries 60% of annual revenue. EBITDA is below zero for the first six months and above it from July through December. Month-end cash bottoms out in Jul at about $127,000. Stock purchases are not timed within the month here, so the real trough just ahead of the August order would be deeper, and the size of the cash reserve allows for that.
Who is on the floor
| Role | Annual wage | Starts | Year 1 end | Year 2 end | Year 3 end | Year 4 end | Year 5 end |
|---|---|---|---|---|---|---|---|
| Owner-operator and store manager | $52,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Assistant manager and lead fitter | $40,000 | Month 1 | 1 | 1 | 1 | 1 | 1 |
| Part-time fit specialist (about 24 hours a week) | $20,000 | Month 1 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Part-time sales associate (about 22 hours a week) | $18,200 | Month 1 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Part-time sales associate (about 20 hours a week) | $16,500 | Month 1 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Weekend associate (part time) | $12,500 | Month 1 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Back-to-school and holiday associates (part time, July to August and November to December) | $22,000 | Month 7 | 0.5 | 0.5 | 0.5 | 0.5 | 0.5 |
| Full-time sales associate | $33,500 | Month 20 | – | 1 | 1 | 1 | 1 |
| Stock and community-events coordinator (part time) | $19,500 | Month 46 | – | – | – | 0.5 | 0.5 |
| Total payroll incl. on-costs | $202,553 | $220,280 | $245,098 | $250,705 | $267,523 |
The owner-operator, an assistant manager who is also the lead fitter, and four part-time staff open the store, about 175 paid hours a week against 67 open hours, or roughly $100 of Year 1 revenue per paid hour. Two people are on the floor most of the day, with a third at peak times. Seasonal associates work July and August and November and December each year. A full-time associate joins in month 20 and a part-time stock and events coordinator in month 46, once receiving starts to pull people off the floor. Part-time and seasonal jobs appear at their annual-equivalent pay. Dana's $52,000 salary sits inside costs, so each profit line is already net of her pay, although a lender may want a market-manager salary layered on. The base forecast reaches these profits without trimming any wage rate.
Profit and loss, with royalty and brand fund
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $909,790 | $1,141,148 | $1,293,163 | $1,392,538 | $1,485,616 |
| Cost of goods sold (footwear, apparel and accessories at cost) | ($453,537) | ($568,870) | ($644,651) | ($694,190) | ($740,590) |
| Gross profit | $456,253 | $572,278 | $648,512 | $698,348 | $745,026 |
| Payroll incl. on-costs | ($202,553) | ($220,280) | ($245,098) | ($250,705) | ($267,523) |
| Rent | ($97,200) | ($100,100) | ($103,100) | ($106,200) | ($109,400) |
| Utilities | ($9,000) | ($9,300) | ($9,600) | ($9,900) | ($10,200) |
| Marketing | ($14,000) | ($15,500) | ($17,000) | ($18,000) | ($19,000) |
| Insurance | ($11,000) | ($11,400) | ($11,800) | ($12,200) | ($12,600) |
| Professional fees | ($14,000) | ($14,400) | ($14,800) | ($15,200) | ($15,600) |
| Software subscriptions | ($6,000) | ($6,200) | ($6,400) | ($6,600) | ($6,800) |
| Franchise royalty (4.5% of sales) | ($40,941) | ($51,352) | ($58,192) | ($62,664) | ($66,853) |
| Brand advertising fund (1% of sales) | ($9,098) | ($11,411) | ($12,932) | ($13,925) | ($14,856) |
| Card processing fees (2.3% of sales) | ($20,925) | ($26,246) | ($29,743) | ($32,028) | ($34,169) |
| Markdowns and clearance beyond planned margin (2% of sales) | ($18,196) | ($22,823) | ($25,863) | ($27,851) | ($29,712) |
| Shrinkage and damaged returns (1% of sales) | ($9,098) | ($11,411) | ($12,932) | ($13,925) | ($14,856) |
| Freight, bags and store supplies | ($6,200) | ($7,000) | ($7,600) | ($7,900) | ($8,100) |
| Cleaning, alarm monitoring and repairs | ($3,800) | ($3,950) | ($4,100) | ($4,250) | ($4,400) |
| Franchisor conference, buying events and travel | ($3,500) | ($3,700) | ($3,900) | ($4,100) | ($4,300) |
| Licenses and state filings | ($1,100) | ($1,150) | ($1,200) | ($1,250) | ($1,300) |
| Fixture refresh and brand-required remodel contribution | $0 | ($2,500) | ($3,500) | ($6,000) | ($18,000) |
| Annual pay raises (3% a year) | $0 | ($6,608) | ($14,926) | ($23,247) | ($33,577) |
| EBITDA | ($10,358) | $46,946 | $65,826 | $82,403 | $73,780 |
| Depreciation | ($13,700) | ($13,700) | ($13,700) | ($13,700) | ($13,700) |
| Interest | ($26,250) | ($25,417) | ($23,474) | ($21,316) | ($18,921) |
| Income tax | $0 | $0 | $0 | ($8,506) | ($10,432) |
| Net income before start-up costs | ($50,308) | $7,829 | $28,652 | $38,881 | $30,727 |
| Start-up costs expensed at opening (franchise fee, legal, training, pre-opening rent, grand opening) | ($93,300) | $0 | $0 | $0 | $0 |
| Net income after start-up costs | ($143,608) | $7,829 | $28,652 | $38,881 | $30,727 |
Year 1 loses $50,308 before start-up costs and $143,608 after them, with EBITDA at negative $10,358. Year 2 is the first profitable year at $7,829, and net income reaches $28,652 in Year 3 and $38,881 in Year 4. It eases to $30,727 in Year 5 as pay raises ($33,577 a year by then) and the $18,000 remodel contribution arrive. Royalty and brand fund together cost $50,039 in Year 1 and $71,124 in Year 3. EBITDA margin is 4.1% in Year 2, 5.1% in Year 3 and 5.0% in Year 5. Income tax starts at $8,506 in Year 4, once the Year 1 operating loss has been used; the model does not deduct the start-up costs, which a tax adviser may treat differently. Net margin is thin: 2.2% in Year 3 and 2.1% in Year 5, after the owner's salary. With a 5.5% royalty and fund, a full floor team and a 50% gross margin, this store does not reach the 8% net margin a healthier retailer would aim for, and no honest change to rent, mix or space size closes that gap without cutting wages. The forecast adds a fit, insole and shoe-care line at a 62% margin, sizes the unit to 2,700 square feet and leaves payroll as it is. Each point of gross margin is worth about $12,900 of profit in Year 3, which is 45% of Year 3 net income, so the vendor terms in the disclosure document matter more than any other single input. The remodel scope is set by the franchisor; $18,000 is a placeholder contribution, and a full refresh could cost several times that and would come out of the reserve. No owner distributions are shown, because retained earnings are still negative at the end of Year 5.
Cash movements
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Cash from operations | ($302,970) | $18,207 | $40,169 | $51,155 | $43,091 |
| Build-out, fixtures and gait kit | ($117,000) | $0 | $0 | $0 | $0 |
| Funding received | $570,000 | $0 | $0 | $0 | $0 |
| Loan principal repaid | $0 | ($17,635) | ($19,579) | ($21,736) | ($24,132) |
| Owner distributions | $0 | $0 | $0 | $0 | $0 |
| Net change in cash | $150,030 | $572 | $20,591 | $29,418 | $18,959 |
| Closing cash | $150,030 | $150,602 | $171,193 | $200,611 | $219,570 |
Cash from operations is negative $302,970 in Year 1, most of it inventory on the shelves at year end ($205,354) net of the $37,277 owed to brands, plus the operating loss and the start-up costs. The store ends Year 1 holding $150,030 and Year 5 holding $219,570. The loan balance drops from $250,000 to $166,918 over the five years, and the owners take nothing out.
Balance sheet with stock and supplier credit
| At year end | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Cash | $150,030 | $150,602 | $171,193 | $200,611 | $219,570 |
| Accounts receivable | $4,985 | $6,253 | $7,086 | $7,630 | $8,140 |
| Inventory at cost | $205,354 | $216,887 | $224,465 | $229,419 | $234,059 |
| Build-out, fixtures and gait kit (net) | $103,300 | $89,600 | $75,900 | $62,200 | $48,500 |
| Total assets | $463,669 | $463,342 | $478,644 | $499,860 | $510,269 |
| Owed to brands and distributors | $37,277 | $46,756 | $52,985 | $57,057 | $60,870 |
| Bank term loan | $250,000 | $232,365 | $212,786 | $191,050 | $166,918 |
| Paid-in capital | $320,000 | $320,000 | $320,000 | $320,000 | $320,000 |
| Retained earnings | ($143,608) | ($135,779) | ($107,127) | ($68,246) | ($37,519) |
| Total liabilities and equity | $463,669 | $463,342 | $478,644 | $499,860 | $510,269 |
Stock turns, sales per square foot and break-even
| Measure | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| EBITDA margin | -1.1% | 4.1% | 5.1% | 5.9% | 5.0% |
| Net margin (before start-up costs) | -5.5% | 0.7% | 2.2% | 2.8% | 2.1% |
| Payroll incl. pay raises as share of revenue | 22% | 20% | 20% | 20% | 20% |
| Revenue per full-time equivalent at year end | $202,176 | $207,481 | $235,121 | $232,090 | $247,603 |
| Average monthly revenue | $75,816 | $95,096 | $107,764 | $116,045 | $123,801 |
| Monthly revenue needed to cover operating costs | $77,537 | $87,295 | $96,825 | $102,352 | $111,541 |
| Debt service cover (EBITDA / interest + principal) | -0.4x | 1.1x | 1.5x | 1.9x | 1.7x |
Break-even sales run at $77,537 a month in Year 1 while the store actually averages $75,816, so it finishes just short at the EBITDA line. Year 2 averages $95,096 versus $87,295 required, and Year 3 $107,764 versus $96,825. That required level covers operating costs alone; interest and principal come on top, which is why debt service cover is the tighter test. Each dollar of inventory earns $2.22 of gross profit in Year 1 and $3.18 in Year 5. Debt service cover is negative in Year 1 because EBITDA is below zero, then 1.1x in Year 2, 1.5x in Year 3 and 1.7x in Year 5. Year 2 is thin, and a lender may want a larger cushion than 1.1x. Payroll with pay raises is 22% of revenue in Year 1 and 20% after that. Sales per square foot are $337 in Year 1, $479 in Year 3 and $550 in Year 5.
A soft market: sales 20% under plan
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| Revenue | $727,832 | $912,918 | $1,034,530 | $1,114,030 | $1,188,493 |
| Net income before start-up costs | ($93,042) | ($31,274) | ($34,805) | ($17,995) | ($8,381) |
| Net income after start-up costs | ($186,342) | ($31,274) | ($34,805) | ($17,995) | ($8,381) |
| Closing cash | $141,909 | $104,043 | $61,613 | $34,440 | $14,557 |
Here every revenue line runs 20% below plan for all five years. Dana answers in several ways. Hires planned from month 13 onward slip by six months, so the full-time associate arrives in month 26. The stock and events coordinator is dropped. Part-time hours shrink 15%. The opening buy is 20% lighter, with the saving left in the reserve. The fixture refresh is skipped, the Year 5 remodel payment is halved, marketing falls 20% and her own salary is cut 20%. Royalty, brand fund, card fees, markdowns and shrinkage fall in step with sales, and nothing goes to the owners. Under those conditions the lowest year-end cash is $14,557, reached in Year 5. The store loses $186,342 in Year 1 after start-up costs, $31,274 in Year 2, $34,805 in Year 3, $17,995 in Year 4 and $8,381 in Year 5. Every year is worse than the base case. Equity ends Year 1 at $133,658, falls to about $68,000 at the end of Year 3 against $212,873 in the base case, and is about $41,000 in Year 5. Debt service cover is 0.2x in Year 2, 0.1x in Year 3, 0.4x in Year 4 and 0.6x in Year 5, so operating profit never covers loan payments and the reserve pays the difference. Cash is still falling by about $20,000 a year at the end of Year 5, so a downside that lasts that long would need the bank to extend the interest-only period or accept a covenant waiver, a smaller floor team than modeled, or a rent concession; none of that relief is in the model. The model has no monthly view after Year 1.
Sources
- Electronic Code of Federal Regulations, 16 CFR 436.2, Obligation to furnish documents (a franchisor must furnish its disclosure document at least 14 calendar days before the buyer signs a binding agreement or makes a payment).
- Florida Department of Revenue, Corporate income tax (tax rate of 5.5% for tax years from 2022).
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