The Mandate
A multi-unit franchisee acquiring three existing units from a retiring operator engaged Feasibility Study Consultant to prepare a third-party feasibility study supporting a SBA 7(a) financing request for a project located in Wake County, North Carolina. Total project capitalization fell within the $1M-$3M band. The capital provider, a national bank participating in SBA 7(a), required documentation consistent with current program review standards. The analytical question put to the team: Did Wake County trade-area demographics and franchisor average-unit-volume benchmarks support the proposed acquisition multiple.
Engagement Scope
- Primary market area defined as a 3-mile drive-time
- Comparable supply set of 22 properties
- Demand model framework: trade-area demographic capture against franchisor AUV benchmarks
- Financial projection horizon: 5 years
- Site inspection completed; operator interviews where applicable
- Primary data collection through field reconnaissance and third-party market data
Methodology Applied
Primary Market Area
The PMA was defined as a 3-mile drive-time from the subject site, calibrated to the demand catchment behavior typical of restaurant assets in North Carolina. The boundary captured the population, employment, and competitive supply base relevant to the subject's operating thesis.
Supply and Demand Reconciliation
The comparable supply set comprised 22 properties operating within the PMA or in directly substitutable submarkets. Demand was modeled using a trade-area demographic capture against franchisor AUV benchmarks approach over a 5 years horizon. The reconciliation tested whether incremental supply, including the subject, could be absorbed within the projection window without compromising stabilized occupancy assumptions.
Capture Rate Calibration
The subject's capture rate was calibrated against the absorption capacity of the PMA. The analysis concluded that PMA absorption capacity exceeded subject build-out by a factor of 1.9 across the projection window, with a stabilized capture rate of 5.8%.
Exhibit 1: Comparable Supply Set, North Carolina PMA
[Table or chart rendered in delivered report.]
Exhibit 2: Demand Projection Summary, 5 years Horizon
[Table or chart rendered in delivered report.]
Exhibit 3: Subject Capture Rate vs. PMA Absorption Capacity
[Table or chart rendered in delivered report.]
Analytical Conclusions
- Trade-area daytime population at all three sites exceeded the franchisor's 35,000 minimum threshold.
- Trailing-twelve unit revenues cleared the franchisor system AUV by 6% to 14%.
- Royalty, advertising, and same-store-sales trends supported the proposed acquisition multiple of 3.4x EBITDA.
- Aggregate portfolio DSCR of 1.52x cleared the lender's 1.25x program threshold.
Deliverable
The delivered report ran 92 pages with 21 exhibits distributed across nine analytical sections, plus appendices documenting comparable supply data, demographic inputs, and financial projection assumptions. The document was prepared to the documentation standards of the national bank participating in SBA 7(a). The corresponding SBA 7(a) review framework guided exhibit selection and supporting documentation.