How to Write a Franchise Business Plan

For those with an entrepreneurial spirit who are looking to take the next step in their career, there are countless franchise opportunities available in a multitude of industries. You definitely won’t be alone in owning your own small business, as 99.7 percent of all businesses in the United States are classified as small businesses.

If owning your own franchise is the right move for you, securing proper financing will very likely be crucial. To secure financing with a lender, one of the first things you’ll need is a solid franchise business plan.

The franchise business plan will not only help “sell” yourself to potential lenders but will also serve as a “road map” for your new venture, and ensure that no details are left out while planning to start a business.

While a business plan may seem like a daunting task, it all comes down to several main components that will make your franchise business plan shine.

An Executive Summary

The executive summary of a franchise business plan is a concise summation of everything that’s set to follow it in the business plan. It should outline the purpose and goals of your franchise and highlight your service and business objectives. In this summary, you should answer the question: How will your business achieve its goals?

Just because the executive summary is the first piece of the franchise business plan, doesn’t necessarily mean it should be written first. It’s recommended that you write your executive summary last, in order to concisely summarize the details of the plan.

A Description of Your Business and Strategy

The next section of the franchise business plan is a description of just what exactly your franchise is and will be. You need to clearly state the product or service that your franchise is providing, why you feel that the franchise is essential in its current market state, who your main competition will be, etc. In your business plan, be sure to provide some market research with relevant statistics, so that financiers know how to forecast their budding investment.

It is important to not only establish a basic standard operating procedure in this section but to also outline how the procedure will operate. It is also imperative to provide some background information on the business and franchise, much of which can be found in Item 1 of many Franchise Disclosure Documents (FDDs).

A Summary of Business Leadership

In short, this section serves to detail the franchise leadership, so potential lenders will know who is going to be operating the franchise. Make sure to list any and all key management roles, and the past relevant experience and qualifications of the individuals who will be serving in those roles. It is also important to note if the franchise will have multiple owners or will be a sole proprietorship.

A Sales and Marketing Explanation

How do you plan to sell and market your goods and services? While many franchisors provide initial assistance with sales and marketing plans through their standardized channels for each franchise, you should have a basic knowledge of what exactly the particular corporation will provide in this area. You should also be familiar with the franchisor’s guidelines for marketing and if they will allow you to go above and beyond in order to market your new franchise.

Financial Needs and Projections

Arguably, the most important part of a franchise business plan is your financial needs and projections. Often, a franchisor will include financial projections in their FDD, but profitability can vary for each franchise. When creating financial projections, it’s important to err on the side of caution and be more conservative with your estimates.

There are many potential franchise funding options when securing capital for a new venture. But in a franchise business plan, it is important to fully detail just what you’ll need the capital for. In your business plan, be sure to include a profit and loss document, balances sheet, and a statement that indicates your cash flow at the time. You will also need to consult the FDD for an itemized list of startup costs, franchise fees, and overall initial investment.

I’ve Done All That. Now what?

Once you have your business plan written, have at least one other person read through it to make sure that you have not forgotten any of the above details. Also, as plans progress for your new franchise, the franchise business plan must be kept as up-to-date as possible. The last thing you want as a potential franchisee is to present a lender with inaccurate information.

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