How operator bids and upside splits work
A bid on QSR Operations says three things: the yearly return the operator will stand behind, the share of the upside the operator asks for, and how long the arrangement runs.
The return comes first
The owner's return is the amount the store must earn before anyone shares anything. If the owner wants 12 percent a year on 800,000 dollars, that is 96,000 dollars a year, or 24,000 dollars a quarter.
The upside is shared
If the store earns more than that in a quarter, the extra is the upside. A bid names the operator's share. At a 50 percent split, an operator takes half of the extra and the owner keeps the other half, on top of the return.
For example, if the store earns 40,000 dollars in a quarter with a 24,000 dollar return, the upside is 16,000 dollars. At 50 percent, the operator earns 8,000 dollars and the owner keeps 32,000 dollars. These numbers are an example only.
What a different split means
- A smaller share asked for leaves more with the owner when the store does well.
- A larger share asked for usually comes with a higher guaranteed return or a proven record.
- Newer operators may accept a smaller share to win the chance to prove themselves.
Comparing bids
Bids sit side by side, with each operator's level, so you can compare the return, the split and the length at a glance. The level shows how much of the operator's record we have checked.
The details of any final deal are between you and the operator. Put them in writing.