Fictional business and illustrative assumptions; these are not reported results or a forecast.
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The calculation
These annual teaching inputs assume frontline labour and its employer payroll costs, materials, vehicle use, insurance, occupancy and ordinary administration are already deducted. The dedicated manager is fully loaded, not just a salary quote.
| Fictional annual USD amount | Value |
|---|---|
| Revenue | $1,000,000 |
| Costs already deducted | $820,000 |
| Surplus before dedicated manager and royalty | $180,000 |
| Dedicated manager, fully loaded | $120,000 |
| Royalty: 6% of revenue | $60,000 |
| Remaining at this stage | $0 |
What work would the owner still do?
Scheduling, absence cover, bids, complaints and collections must actually be covered by paid management. If the overseas owner still supplies substantial unpaid work, the manager title has not removed that dependence.
The remaining figure excludes debt service, income taxes, replacement capital and growth funding. Avoid deducting the already-included labour or overhead twice. Use actual duties and local costs before deciding whether to change fees, prices, the delivery model or scope.
Annual arithmetic is not the next payroll
An invoice can count as accrual revenue before collection. Payroll, deposits, equipment and debt can fall due first, so the cash timing needs its own calculation even if an annual model shows profit.
Scope
- All amounts are fictional, not actual franchise earnings, a U.S. wage quote or tax analysis.
Next step
Check what remains after paying for the owner’s replacement work and the actual royalty base/timing.
Sources & review notes
U.S. Small Business Administration
Passage, dates and research notes
official-guidance · Start with a balance sheet; accounting methods
The balance sheet is the foundation of managing your finances.
Supports bookkeeping and cash/accrual distinction; fictional capital and cash-flow examples are original assumptions, not SBA benchmarks.
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