Business interruption or other lost profits situations can happen to franchised businesses. These losses can actually be easier to calculate than those of single location businesses due to more information available from other franchised locations to perform damage calculations. The use of this type of information is often referred to as the Yardstick approach or the Benchmark approach.
Owners of franchised businesses may own multiple locations that can be used as an indicator of how the damaged business might have performed but for the incident. Many factors come into play when it comes to reasonableness of using these locations as an indicator, such as demographic, local competitors, residential or commercial areas, and the distance between other locations and the loss location.
Other factors behind the performance of these other locations must be carefully evaluated. For example, can the stronger performance of other locations be attributed to the damage at the loss location? Was there other factors influencing the performance of a location such as renovations at a particular location that lower the sales volume? Many such questions have to be answered before finalizing the loss calculation.
A&C’s qualified and experienced professionals are here to assist businesses & insurance companies in reaching a supportable lost profit analysis. If you have questions regarding this topic, please reach out to us at (469) 467-4660, or firstname.lastname@example.org.