Introduction: What is a Franchise Business Plan?
A franchise business plan is a comprehensive document that explains the strategy and operations of a franchised business, as well as how much money it could make. It is a very important tool for franchisees to use to secure money from lenders and to demonstrate their business plans to franchisors.
It usually describes the franchised business system, the type of franchise agreement, where the business is located, and how much money it is expected to make.
Overall, a solid financial plan is one of the most important tools franchisees need to run their businesses successfully. It gives the franchisee a plan to follow, laying out the strategies and operations they need to do to be successful over time.
A detailed plan can help convince lenders to invest money in the franchise. Also, getting help from professionals can improve the financial plan and make it more likely to be successful.
The business plan for a franchisee must not only focus on money but also look at the business as a whole. It should be a plan for complete success that can persuade the lender to provide the money you need.
Presenting the Business Plan to Prospective Partners or Lenders
The description of your franchise business plan is also important to anyone with whom you want to do business. For example, you need it when you are trying to get a loan and need to convince lenders that your business will be successful and make money.
Most businesses need outside funding from a lender to get started, so a business plan is a must. For new businesses, the business plan is the most important part of the business.
Your business plan should be clear and focused on the key components of the business when you show it to a lender or other corporate executive.
How Should a Franchise Business Plan Be Written?
Research is the first step in making a business plan for a franchisee. Start thinking about who you will need to show the franchise plan to, such as potential lenders, and what their specific needs are so you can make it fit their needs. It might be a good idea to write more than one draft for different audiences.
The main difference between a standard business plan and a franchise plan is that a franchise plan must include aspects of both the franchisee and the franchisor. This means that you are combining different parts of both businesses.
After you sign the franchise agreement, the franchisor will give you all the information you need about the business’s management structure, marketing strategy, customer base, daily operations, start-up costs, and ongoing costs. They may also put you in touch with a franchise specialist lender.
Getting Professional Help
Although there are legal repercussions involved with franchisors making any predicted earnings claims for inclusion in the business plan, some franchisors could assist franchise units with their business plans. But keep in mind that only you can decide how you’ll manage it.
Since writing a business plan is challenging, many people decide to hire a specialist who has a track record of writing successful plans that secure solid loans from lenders.
An accountant can also be a good source of advice since they often know how to help their clients secure finance. Others to contact as experts include franchisees with experience or seasoned business people. Others to contact as experts include franchisees with experience or seasoned business people.
If you decide to write it yourself, you can find a lot of information online or in business books to help you with the layout, organisation, and content of your business plan.
We’ve given you a business plan template below that tells you exactly what you need to put in each section. The most important thing to remember is that you are bringing the franchisee and franchisor sides of the two businesses together.
Don’t forget that the franchisor doesn’t have to approve your business plan for a franchise. This is because if they do, your franchisor might not be meeting their legal and business obligations.
Business Plan Template
Executive Summary
The executive summary is a brief overview of the entire business plan. It should provide a snapshot of the franchise opportunity, the business model, the franchise system, anticipated sales, and how the franchise will be successful. Keep it concise and compelling to capture the reader’s attention.
Business Description: Defining Your Franchise
This section should provide a detailed description of the franchise, including its background, history, products or services, target market, competition, and growth potential. You should also describe the franchise’s unique selling proposition and how it differentiates itself from other businesses.
Market Analysis
This section should analyse the target audience, and the competition and identify the market size, trends, and how the franchise will compete against other businesses.
Marketing and Sales Strategies: Reaching Your Target Audience
This section should outline the marketing plan and sales strategies that you will use to attract your target audience. You should detail how you will position the franchise, what marketing channels you will use, and what the marketing budget will be. Include information on pricing strategies, promotions, and advertising.
Management and Staffing: Outline Your Team’s Experience
This section should provide details on the management team and staffing structure of the franchise unit. You should identify the key roles and responsibilities, the qualifications and experience required, and any training or support that will be provided to staff. This section should also include information on salaries and other employment costs.
Financial Projections: Predicting Future Growth
This section should provide detailed projections for the operation. You should include anticipated running costs, revenue, profit and loss statements, cash flow statements, and break-even analysis. They should be based on realistic assumptions for the franchise business, and you should explain how you arrived at them.
Funding Requirements: Presenting the Numbers
This section should identify the funding requirements for the franchise. You should detail how much funding you need, how it will be used, and what type of financing you are seeking. It should also include information on any collateral you can provide and how you will repay the loan.
Risks and Challenges:
This section should identify the risks and challenges associated with the franchise. You should identify any potential obstacles that could impact the success of the business, such as significant competitors, and outline how you intend to mitigate them.
Appendices
The appendices should include any supporting documents that are relevant to the business plan. This could include any research data, financial statements, legal documents, or any other relevant information.
A more detailed downloadable template is available here from the British Business Bank, along with a useful guide on filling it in.
Check, Check and Check Again!
When you’re done with the first draft of your business plan, make sure you haven’t forgotten anything. Fix the grammar and spelling. Make sure it is well-organized and easy for the people you want to read it to understand.
Take your business plan to advisors and ask them what you can do to make it easier to read or better in general. An experienced advisor might be able to see where it is lacking and suggest changes that could make the difference between success and failure.
Updating Your Business Plan: Keeping it Relevant
After you have secured the monetary resources that you need, you enter the next phase – running your business. The important thing to remember now is to stick to the plan!
If you choose to deviate from the methods which you detailed in the business plan for achieving your goals, how and why are you doing so? Are any changes that you make the result of new and unexpected conditions in the market?
See your business plan as a live document; update it as necessary when circumstances change. If you intend to use it to give your company credibility and instil confidence, you need to make sure it is current and correct.
Maintaining it will help you personally because it will keep you on track to your objectives and show you any advancement you have achieved. Remember that those that fail to plan, plan to fail.
Many businesses with simple plans in markets that do not change very quickly review their business plan annually. It goes without saying that your franchisor will be a key partner in this process. In fact, you should expect the franchisor to arrange an annual review for your business as a whole and so this is an ideal time to review your business plan.
By putting together the strongest possible business plan with the most help and advice possible, you can increase the odds that you will be able to form strong partnerships and that your business will be able to maintain its success over the long run.
Conclusion: Key Takeaways for Drafting a Successful Franchise Business Plan
In summary, drafting a successful franchise business plan requires careful research, a solid understanding of your target market, and a clear vision for the future of your business.
Remember to include financial projections, marketing strategies, and an analysis of the competition in your plan. With these key elements in place, you will be well on your way to building a thriving franchise business.
Please note: None of the above constitutes financial and/or legal advice. We advise people to seek their own professional advice suited to their personal circumstances. You can find franchise specialist legal and accounting services in our directory.
