Writing Your Franchise Business Plan

 

Your ability to finance your franchise is a crucial first step along your franchise journey. A clear business plan will:



• Lay out the goals of your business venture in a step by step manner
• Show your investors the exact method and process you’ll follow to succeed
• Give banks, investors, and lenders confidence to finance and support your venture.

The main purpose of a business plan is to help the business owner, as well as clients, stakeholders, and partners understand the direction that the franchise is headed. A business plan will also reassure the banks, lenders and investors that your franchise is sound. Without a business plan, it will be more difficult to secure funding for your project.

If you have never created a business plan before, it may seem overwhelming. You may want to talk to a financial professional who can help you decide what to include in your plan. 

Five Important Steps to Build Your Business Plan

Step One: Determine Your Audience

A business plan can be written for different audiences. It can be:

• Internally focused and directed to people within a company
• Externally focused to address concerns of external stakeholders such as investors, customers, clients, lenders and donors.

The time frame for a business plan is often three to five years.

Step Two: Start with a Franchise Summary

Begin with a summary of the franchise you intend to purchase. This introduction should also provide essential background information about the franchisor that includes their:

• Track record
  
• Other franchisees
  
• Products and services.

The introduction should also describe the general market that the franchise caters to.

In the body of the business plan, describe your strengths and experience as a manager, as well as any other people in management positions that you intend to hire. This is crucial, as the quality of management can ultimately make or break a franchise. 

If you have completed the Franchise Self-Assessment, review your report for strengths that you want to highlight.

Step Three: Prepare a Competitive Analysis

Next, determine the unique selling proposition (USP). The USP is what makes the franchise’s products or services stand out from the competitors. Think about:

• What makes the franchise unique?
• Does it have a niche or specialized market?
• What are the specific features or benefits of the products or services?
• What will make it especially marketable or profitable?

Inspire confidence in your audience by explaining how you expect to meet sales and revenue targets, and how you will deliver products and services to the customers.

Step Four: Prepare Market Analysis

The marketing section describes the state of the market sector, including competition and market trends, and information about operations. This section can also include: 

• Customer demographics and characteristics
• Expected market share
• Overall marketing strategy

In this section, you can show how you plan to use your strengths and overcome your weakness, as well as potential threats and opportunities the franchise will face. Identify how you will make the most of the opportunities and reduce the threats.

Next comes the operations section. This paints an overall picture of exactly how you will produce the products or services. This will explain business principles and outline logistics such as:

• Location
• Property
• Facilities
• Leases
• Employees
• Insurance
• Technology
• Equipment
• Suppliers

Step Five: Set Financial Goals

The financial section describes how the franchise is expected to perform financially and provides information about your personal financial situation. Ideally, this section should include:

• The monthly budget and cash flow projections for the first two years of operation
• Personal financial statements that outline your net worth

The cash flow projections are particularly important, since they show the monetary amount that people can expect from your franchise. This will help investors to understand the expected scope of success and allow them to realistically appraise their investment in your business model.

Helpful Hints:

1. Show your investors there is a market for your franchise’s products and services.
   
2. Demonstrate your capability and that of your management team.
   
3. Prove that you have adequate financial and physical resources.
   
4. Identify how you will face any obstacles and include a contingency plan.
   
5. Show the plan and general timeline for your franchise.
   
6. Use clear language when you write your business plan. Avoid overly technical language.

Following these steps will give you an idea of what to include in your business plan. Every business is different, as is every business owner, so feel free to add your own personal flair to give your investors a better idea of who you are.

Following the business plan format and using it to promote and explain your business model will reassure your investors, partners, and clients about the strength of your plan and confidence in your franchise.