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7 Steps to a Great Franchise Business Plan
August 5, 2022
What is a Franchise Business Plan?
A highquality franchise business plan is important for a number of reasons and will be the first significant step you take towards opening your own franchise business. A franchise business plan outlines what you’ll be doing, who you will compete against, and how your business will make money. According to the Small Business Association, a traditional business plan should contain the following:
- Executive Summary
- Company Description
- Market Analysis
- Organization and Management
- Service or Product Line
- Marketing and Sales
- Funding Request (if being made)
- Financial Projections
- Appendix
A franchise business plan is necessary when approaching an institution for credit, but it also gives you a clear idea of how you think the business will work and what challenges you will face. With that in mind, you want to give it the best shot possible and make a franchise business plan that will set you on the path to entrepreneurial success, so here we’ll look at some steps you can take to ensure that happens.
7 Steps to a Great Franchise Business Plan
1. State your Value Proposition
Your executive summary at the start of the franchise business plan also gives you an opportunity for your elevator pitch. This value proposition is the concise version of why you believe your business will bring something new to the market and ultimately be a success. If you’ve had the idea of starting your franchise, then you believe it will succeed, so share that with whoever will be reading.
2. Lean on Your Franchisor
One of the great advantages of making out a franchise business plan over a normal business plan is that your franchisor should already have many of the details you need. The franchise owner, through the Franchise Disclosure Document (FDD), should supply you with much necessary material about products, financials and how the business will operate, giving you a relatively straightforward blueprint for you to follow.
3. Investigate your Territory
Market analysis is a key part of your franchise business plan, and it can tell you a number of things. It’s a good idea to find out how many businesses in your area provide the same goods or services and how busy they are. The dream combination is high demand and low competition, but it’s rare to find that situation. Investigating your territory properly will give you a better idea if your franchise business idea will be viable.
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4. Show a Clear Financial Plan
All business owners need to have an idea of what the inputs and outputs are going to be that will make their business viable. These inputs are not just stock. However, it’s also factors like rent, staff wages, electricity and fuel, so all of these need to be accounted for when working out your outgoings, then matched to your sales and sales margins to give you gross profit. It can be slightly daunting if you’ve never got into financials before, but again, that’s why a franchise business plan can be so much easier as you can ask your franchisor for estimates for some of the most important figures (e.g., sales per year or costs due to the franchisor themselves).
5. Define Your Structure
There can be a significant range in the management structure of a new franchise. A McDonald’s, for example, could have multiple layers and areas. At the same time, a home improvement franchise could easily be an owneroperator, with other staff or even family members only involved parttime. Even if it is only a minimal organizational structure, treat it professionally, and list the titles of all involved and their prior business experience or qualifications.
6. Identify Your Customers
A key to a successful business is knowing who your customers are and what they need. The more detail you can give about who you are targeting, the better the case for why your business will succeed and why an institution should advance your credit. Clear customer identification will also feed into and support the rest of your franchise business plan.
7. Demonstrate Repayment
The one thing a financial institution cares about when seeing money go out the door is when and how it’s going to be coming back. If you’re using your franchise business plan to apply for finance, make sure you have crunched the numbers clearly about how repayments are going to fit into your monthly budget and what kind of a timeline you’ll be keeping to.
Conclusion
A franchise business plan is an important step on your journey to starting your own business. It’s a document that can take you a while to put together correctly but will then showcase what you are planning to achieve for any organizations that require it. It will also look good for the franchise you may be interested in starting if the franchise agreement hasn’t already been signed. With the right kind of work put into it, you’ll have an asset that you can be proud of, which outlines the path you’ll follow to success.
If you’re interested in taking the next step and opening your own franchise, why not go with one with no national competitors and work in a thriving industry like Screenmobile? To find out more about franchising with us, you can read more about it here or talk to our team.
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