Franchising in Belgium: substantiate your turnover forecasts

A successful business of your own can produce compelling figures, but it does not prove what a future franchisee will earn. If you want to franchise an existing Belgian business, you need to translate historical results carefully into expectations for another operator. A turnover forecast that can be checked helps prospective franchisees make their own assessment and builds trust within your franchise network. This guide is about that process, not about promising success.

1. Distinguish results from expectations

Start with three separate categories: actual results, assumptions and calculated projections. Never present them as though they carry the same weight as evidence.

Actual results come from your existing business. For each set of figures, state which outlet they relate to, the period covered and the definition used. Is turnover shown excluding VAT? Have refunds been deducted? Do the figures include temporary events or exceptional orders? Without this context, even an accurate figure can give a misleading impression.

Assumptions describe what you envisage for the new outlet, such as the number of trading days, customers per day and average spend. Projections are the outcomes you calculate from those assumptions.

Next, make clear which advantages may not carry over. Your own business may benefit from years of brand recognition, personal customer relationships or an exceptionally favourable location. A new franchisee will not necessarily start with the same advantages.

Do you currently have just one company-owned outlet? Say so explicitly. Do not describe its results as an average across the franchise network. Limited experience is no reason to withhold all figures, but it does mean you should be honest about the limits of your evidence.

2. Build a forecast the prospective franchisee can check

A useful model starts with day-to-day activity, not an attractive annual figure. For a shop, turnover may be based on visitor numbers, the proportion who make a purchase and average transaction value. For a service business, available hours, utilisation and the average rate charged may be the main building blocks.

Use a simple spreadsheet that records the following for each assumption:

• its description and unit of measurement;
• the source of the data;
• why it is relevant to the new outlet;
• any uncertainty or local variation;
• the date the data was checked.

Allow for a start-up period. A new outlet generally needs time to build awareness, so do not quietly apply the turnover pattern of an established company-owned business from the very first month.

Develop a cautious scenario, a base case and a more favourable scenario. Vary specific factors, such as slower customer growth or lower average spend. A scenario is not a probability calculation: do not call an outcome ‘almost certain’ unless you have evidence to support that claim.

Turnover is not income, either. Show which costs fall outside the turnover forecast, such as staff, rent, stock, franchise fees and finance costs. Encourage prospective franchisees to work with their own accountant to assess what the assumptions mean for cash flow and personal income.

3. Keep your communications legally consistent

Belgium has specific rules on pre-contractual information for commercial cooperation agreements. These appear in Book X, Title 2, Articles X.26 to X.33 of the Belgian Code of Economic Law. The statutory definition is set out in Article I.11, 2°. Franchise arrangements that meet the conditions for application fall within these rules.

The prospective franchisee must receive the draft agreement and a separate pre-contractual information document, known in Belgium as the PID, at least one month before entering into the agreement. The PID contains important contractual provisions and socio-economic information. The documents must be clear and understandable, and supplied in writing or on a durable, accessible medium.

A sales presentation or forecast spreadsheet does not replace these documents. Equally, a compliant PID does not neutralise an exaggerated sales promise. Alongside the specific disclosure obligations, general rules on pre-contractual liability and defects in consent also play a role.

Have your presentation, forecast, PID and draft agreement reviewed together by a legal adviser. Discuss which financial information must be included and how any supplementary estimates should be explained. A general statement such as ‘results may vary’ is no substitute for sound supporting evidence.

4. Keep the evidence behind your presentation too

Before your first franchise recruitment discussions, create a single file containing the source data, calculations and approved explanations. Appoint someone to check changes and ensure everyone uses the same up-to-date version.

For each prospective franchisee, record which version was shared, when it was shared and which follow-up questions were answered. Confirm important explanations of the figures in writing. This helps prevent a verbal example from later being remembered as a firm commitment.

Encourage prospective franchisees to gather their own market data and critically assess your assumptions. If local conditions prove materially different, adjust the model rather than explaining away the differences.

Practical conclusion: do not share a turnover forecast until someone outside the business can follow the calculation. Separate facts from assumptions, show the uncertainties and ensure your recruitment pitch is consistent with your legal documents.