Latest / Franchise Conversations with Fexingo: Buying, Running, and Scaling Franchise Businesses / How Top Franchisees Use Rolling Forecasts to Beat Budgets
Transcript
- Lucas: So there's this idea in franchise finance that the annual budget is almost sacred. You spend weeks building it, the franchisor signs off, and then you're supposed to live by it for twelve months. But I've been talking to multi-unit operators who've basically ditched the budget entirely. Luna: Ditched it for what? Lucas: Rolling forecasts. Specifically, a rolling 13-week cash flow forecast. And the results are pretty striking — one guy I spoke with, he runs seven Jersey Mike's in Phoenix, told me he caught a labor cost creep of about 3% in week six of a quarter that his static budget would have hidden until the P&L came out three months later. Luna: Three percent doesn't sound huge, but across seven units that adds up fast. Lucas: Exactly. For him, that was about eighteen thousand dollars a quarter. And because he caught it in week six, he could adjust scheduling right away instead of waiting for the budget review. So let's talk about what a rolling forecast actually is and why it works better than a budget for a growing franchise. Luna: I think a lot of franchisees hear 'rolling forecast' and assume it's some big ERP system they don't have time for. But my understanding is it's simpler than that. Lucas: Much simpler. A rolling forecast is basically a look ahead — typically 13 weeks — that you update every week. You drop the week that just ended and add a new week at the end. So you always have a forward view. A budget, by contrast, is a fixed target set months in advance. It doesn't adjust when reality changes. Luna: And reality always changes. Especially in food franchises — commodity prices, labor availability, foot traffic. Lucas: Right. The Jersey Mike's guy I mentioned — his name is Derek, by the way — he told me that in his first year using a rolling forecast, he renegotiated his produce contract in July because the forecast showed avocado prices were going to spike in August. He locked in a price before the spike hit. His static budget wouldn't have flagged that until September, when he would have already been paying more for a month. Luna: So the forecast becomes a real-time decision tool, not just a report you file away. Lucas: Exactly. And the other big benefit Derek mentioned is that rolling forecasts kill the 'use it or lose it' spending mentality. When managers know there's a fixed budget line item that resets at year-end, they rush to spend whatever's left in November. But with a rolling forecast, there's no year-end cliff. Spending is tied to actual need, not to burning through a budget. Luna: That's huge for franchisees with multiple locations. I've seen unit managers order extra uniforms or equipment just to use up budget, which is basically throwing money away. Lucas: Yeah. Derek said he estimates that killed about 2% of his operating budget every year before he switched. So the savings from the forecast alone — catching labor creep, avoiding unnecessary spending, renegotiating contracts early — easily paid for the software and the time. Luna: What software are we talking about? Because I think a lot of franchisees hear 'forecasting' and assume it's some expensive enterprise tool. Lucas: Derek uses LivePlan, which is about twenty bucks a month. It's designed for small businesses. There's also Jirav, which is a bit more robust but still affordable for a multi-unit operator. And honestly, some franchisees just use a well-built Google Sheet. The key isn't the tool — it's the discipline of updating it every week. Luna: So how does a franchisee actually set one up? Say you're a single-unit owner with no finance background. Where do you start? Lucas: First, pull your last three months of actual cash inflows and outflows. Categorize them — labor, food cost, rent, marketing, utilities, and so on. Then project those forward for 13 weeks, adjusting for known changes. Like if rent is going up in week 10, plug that in. If you have a promotion planned for week 8 that usually boosts sales by 10%, account for it. Luna: And then every week, you replace the week that just ended with actual numbers and add a new week at the end. Lucas: Exactly. So you're always looking 13 weeks ahead. Derek says it takes him about 30 minutes every Monday morning. He does it while his first cup of coffee is brewing. Luna: Thirty minutes a week to potentially save tens of thousands a year. That's a good return. Lucas: And the franchisor actually likes it too, because the forecast gives them early visibility if a unit might need support. Derek told me his franchise business consultant uses his rolling forecast to anticipate which stores might need extra training or marketing help, rather than reacting after problems show up on a P&L. Luna: That's a great point — it turns the relationship with the franchisor from adversarial to collaborative. You're sharing forward-looking data instead of defending past results. Lucas: Exactly. And that collaborative dynamic is one reason why Derek says he'll never go back to a static budget. The rolling forecast gives him control, but it also builds trust with the home office. Luna: So if a franchisee is listening and thinking 'I should try this,' what's the first concrete step? Lucas: Start with your bank statements. Lay out the last 13 weeks of actual deposits and withdrawals. Don't overthink categories — just group them into maybe ten buckets. Then project the next 13 weeks using those averages as a baseline. Adjust for any known changes. And then commit to updating it every Monday for one quarter. After 13 weeks, you'll have a full cycle of actual vs. forecast, and you'll see the pattern. Luna: And you can iterate from there. Maybe you add more categories later, or tie it to your POS data. Lucas: Right. The goal isn't perfection. It's visibility. And that visibility is what lets you make decisions in real time instead of reacting after the fact. Luna: Honestly, if this episode gave you one idea that saves you money or stress, that's the kind of thing that makes this show worthwhile. If it did, you can find the link at buy me a coffee dot com slash fexingo. No pressure, just a way to keep these conversations ad-free and focused on practical stuff like this. Lucas: Yeah, and we mean that — it's the smallest possible ask. If the show has moved your work forward in some small way, that's the link. Otherwise, no worries. We keep doing this either way. Luna: Alright, back to rolling forecasts. One thing I've wondered: how does this work for franchisees who have seasonal businesses, like ice cream or holiday retail? Lucas: Great question. Rolling forecasts actually handle seasonality better than static budgets because you're constantly updating your projection based on the most recent actuals. Say you run a frozen yogurt franchise. In June, you see the first two weeks of summer traffic. You can adjust your July and August projections upward immediately, rather than relying on a budget you wrote in January that assumed a 10% increase. The forecast adapts. Luna: So instead of being wrong all year, you're only wrong for a few weeks at a time. Lucas: Exactly. And that's the core advantage: a rolling forecast is always a little wrong, but it gets less wrong every week. A budget is very wrong from day one and stays that way until you revise it — which most franchisees never do. Luna: I've heard some franchisees say they're worried about the time commitment. Thirty minutes a week sounds small, but if you have ten units, does it scale? Lucas: Derek has seven units and he still does it in about 45 minutes. He uses a template where each store has its own tab, and a roll-up tab shows the total. The key is to keep the data entry simple — he pulls sales and labor from his POS report, and other costs from his bank feed. It's not manual data entry for every line item. Luna: And I imagine once you've done it for a few weeks, it becomes a habit. The hardest part is starting. Lucas: Absolutely. And Derek told me the biggest hurdle wasn't the time — it was the mental shift. Letting go of the idea that the budget is a commitment. He said for the first few weeks he felt like he was cheating somehow. But after one quarter, he couldn't imagine going back. Luna: That's the kind of feedback that makes you think this isn't just a finance tool, it's a different way of running a business. Lucas: It really is. And I think that's why the most successful franchisees — the ones who grow from one unit to ten or twenty — almost always adopt some form of rolling forecast. It's a scalability tool as much as a financial one. Luna: Alright, so if someone wants to try it, what's the one resource you'd point them to? Lucas: I'd say grab the free template from LivePlan's website — they have a basic 13-week cash flow forecast template that works in Excel. No signup needed. Plug in your numbers for one store, and you'll see the power immediately. Luna: And if they want to hear more about Derek's specific setup, we can maybe have him on the show sometime. Lucas: I'd love that. He's got a ton of practical wisdom. But for now, the takeaway is: don't worship the budget. Build a rolling forecast. It's cheaper, faster, and smarter.