Franchise Glossary
Unit Economics
What is Unit Economics in franchising?
The financial performance of a single franchise unit, including revenue, cost of goods, labor, royalties, rent, and other operating expenses, expressed as a model showing whether the business is profitable at the unit level and by how much. Strong unit economics are the foundation of any sound franchise investment decision. They are best understood by analyzing Item 19 of the FDD alongside direct conversations with existing franchisees. A brand with great marketing but weak unit economics will always produce struggling franchisees.