To ensure your franchise business success in this highly competitive market, you need a properly structured franchise business plan. With over 12 years of experience, we have helped over 5,000 entrepreneurs create business plans to start and grow their franchise businesses. Using the following franchise business plan template, you can put together an effective business plan.
The franchise business industry has two primary agents; franchisor and franchisee. A franchisor is the business system/brand owner, and a franchisee is an entity that rents the business system/brand name against a fixed initial fee and royalty.
A franchise business plan is popular in many industries. Popular franchise systems are fast food chains like McDonald’s, KFC, Subway, etc. You can find a franchise opportunities in many industries.
A franchisee operates a business location under the guidelines of the franchisor. You have little freedom to experiment with new things.
The FDD, or Franchise Disclosure Document, is the legal contract between a franchisor and a franchisee. FDD has details of the rights and responsibilities of the two parties. This is generally a lengthy document. You need to understand it before you buy a franchise.
The franchise industry is growing fast. As International Franchise Association (IFA) reports, 2022 is the year of opportunity for franchises.
The estimated number of total franchises in 2021 was 774,965 with a total number of employees at 8,192,600, and an output of $787.7 billion.
The total GDP size of the franchise economy in 2021 was $474.2 billion. The growth projections for franchises in 2022 stand at 2.2%.
These are the top industries with the most number of franchises.
A franchise business has different dynamics as you are selling an established brand to a market with a demand for that brand’s products or services.
We have identified these five factors that play a crucial role in making a franchise successful.
A franchise business plan is a roadmap for starting and growing your franchise business. Your business plan outlines your business concept, identifies your target customers, presents your marketing strategy, and details your financial projections.
Any bank or investor you approach will require a franchise business plan, so putting one together will be critical to securing funding.
In short, writing a business plan can help you succeed if you’re thinking of starting a franchise business or pitching to investors or venture capitalists.
Franchise business plans can be used to gain interest from potential investors or to secure loans from banks. They are also helpful to you as the owner. A franchise business plan allows you to thoroughly analyze every aspect of your potential business.
A solid, detailed plan gives you a clear path to follow, forces you to examine the viability of a franchise business idea, and may help you better understand your company’s finances and competition.
A franchise business with a plan grows 30% faster than the rest. On the other side, if we look at the fast-growing companies, 71% of them have a business plan.
A franchise business plan is a living document that should be updated annually as your company grows and changes.
Do you need help creating a franchise business plan? Check out these six free, proven franchise business plan examples from different industries to help you write your own.
Conventional Banks and Credit Unions
You can get a loan from banks, credit unions, or other financial institutions. Getting such a loan for a franchise business depends on many factors including turnover, credit history, and expected revenue of the business.
SBA regularly offers loans, grants, and lifelines for small businesses. Keep an eye on the 7(a) program that is aimed at small businesses in the early stages.
A franchise business is a high investment business. Consider adding business partners to create a money pool big enough for the business needs.
If you have retirement funds available, you can use retirement funds or 401k for starting a franchise.
Securities-Backed Line of Credit
if you have an investment portfolio, you can get a line of credit against those securities. These securities will serve as loan collateral.
Equipment, Machinery, and Furniture Lease
You can get franchise machinery, vehicles, computers, furniture, and other equipment at lease. If you get an equipment lease, you may also get a buyout for $1 when the lease term ends.
A franchise business’ success is partially determined by its supply chain. We can help you purchase goods and services on Net 30 terms. Create a net 30 account with us and start building your business credit.
To write a franchise business plan, you don’t need to be an expert. Our step-by-step guide will show you how to write a franchise business plan, or you can just download our proven sample business plans to get a better idea.
The executive summary is the most important part of the document since it outlines the whole business plan. Despite the fact that it appears first in the plan, write the executive summary last so you may condense key concepts from the other nine parts.
It’s a part that catches the investor’s eye and provides key information about your company’s overview and upcoming short- and long-term goals.
Tell them what kind of franchise business you have and what stage you’re in; for example, are you a startup, do you have a franchise already that you want to expand, or do you have a lot of franchise businesses?
Finally, an executive summary should provide investors with a preview of what they may expect from the rest of your document.
Check out these executive summary examples to help you write a perfect one for your franchise business plan.
An executive summary is the most important part of your franchise business plan, and it need not be challenging to write. This is why we have put together some awesome free Executive Summary examples for you.
The franchise business plan’s research section will most likely be the most time-consuming. Here, you will elaborate on how you will fit into the existing franchise market.
Since your research findings should serve as a sound confirmation of the conclusions you have outlined thus far, they will demonstrate your understanding of the industry and market.
Industry analysis can be presented as a 8-step process when written as part of a company’s business plan.
The first condition for franchise business is to identify its target customers clearly. Different franchise business have different customers.
The customer analysis section is an important part of any franchise business plan since it evaluates the consumer segments that your company serves. It identifies target customers, determines what those customers want, and then explains how your franchise items will meet those requirements.
Customer analysis may be divided into two parts: psychosocial profiles (why your franchise items suits a customer’s lifestyle) and demographic profiles (descriptions of a customer’s demographic qualities).
With regards to demographics, include information about the ages, genders, locations, and income levels of your customers. When targeting businesses, describe what kind of business, size, and location your target customers have.
The psychological profiles of your target clients reveal their wants and needs. The better you understand and identify these demands, the better you can attract and retain customers.
It is necessary to do a competitor analysis. Because you may use their data to define your goals, marketing plans, tactics, new product lines, pricing, and more. Use competitor analysis to:
The first step is to determine who your direct and indirect competitors are.
The direct competition consists of other franchise businesses that offer the same goods or services to the same audience.
Your indirect competitors are other options that customers have to purchase from you that aren’t direct competitors.
Among indirect competitors are the business selling similar product or service. For example, if you have McDonalds’ franchise, someone selling Chinese or Italian food is your indirect competitor.
Once you’ve identified the competition, concentrate on the direct, head-to-head competitors, since they are the most threatening to your franchise business— but keep an eye on the indirect competition as well, just in case.
Provide an overview of each direct competitor’s business and detail their strengths and weaknesses.
You will be able to position yourself competitively in the market if you perform proper competition research. Perform a SWOT Analysis to learn your competitors’ strengths, weaknesses, and competitive advantages in the following areas:
The final section of your competitive analysis should include a list of your areas of competitive advantage. For example, how will you offer better value at competitive prices for the target market.
Consider how you will outperform your competitors and include them in this portion of your franchise business plan.
Take advantage of our free SWOT analysis examples. Make your business future-proof by identifying your strengths, weaknesses, opportunities, and threats using this free SWOT Analysis Template.
Creating a marketing plan for a franchise business involves identifying the target demographic and finding the goods and services that suit their preferences.
As part of your marketing plan for a franchise business, you should include:
Pricing and Product Strategy
Your franchise business must offer goods or products that are different from those of your competitors. Research what your competitors offer and how they price their offer.
Placing and Promotions
Place explains the location you’ll chose for your franchise and the reasons of the selection.
Promoting your franchise business is the final part of your marketing plan. In this step, you document how you will drive customers to purchase your goods or services. A few marketing methods you could consider are:
You should also think about your franchise company’s Unique Selling Proposition (USP), which should explain why clients should choose you over other franchise businesses. Ensure that your USP is reflected in your marketing.
Pro Tips: Learn how to create a marketing plan in a business plan.
While the previous sections of your franchise business plan described your goals, your operations plan discusses how you will achieve them.
An operations plan section in a business plan is helpful for investors, but it’s also helpful for you and employees because it pushes you to think about tactics and deadlines.
Your operational plan should be able to answer the following questions:
Your operations plan should be divided into two individual parts, as seen below.
Your daily short-term processes include all the tasks involved in producing goods or services, managing operations, selling, employee management, etc.
Long-term goals are milestones you hope to reach. they might be growing your business, such as introducing new items or retail outlets, meeting particular sales milestones, and meeting other essential business-oriented goals like recruiting more staff, opening additional locations, and so on.
When writing a franchise business plan, the management section of a business plan outlines your management team, staff, resources, and how your business ownership is structured.
This part may be easily organized by dividing it into the following points:
This section outlines your franchise business’s legal structure. An LLC or a Corp is favored in the franchise business ecosystem.
Internal Management Team
This section should not only outline who is on your management team but also how each person’s skill set and experiences will contribute to the growth of your franchise business. Ideally, you and/or your team members have direct expertise in the franchise business. If this is the case, highlight your experience and skills.
External Management Resources
Think of these external management resources as your internal management team’s backup. Consider forming an advisory board if your team is lacking expertise and experience with franchise business.
An advisory board would consist of 3 to 7 people who would serve as mentors to your franchise business. They would help with strategic direction and strategy advice.
If necessary, search for advisory board members with expertise running franchise business.
Describe all of your company’s external professional advisers, such as accountants, bankers, attorneys, IT experts, business consultants, and/or business coaches.
The final topic to consider in the management area of your franchise business plan is your human resource needs.
As part of your financial plan in a business plan, you should present a 5-year financial statement broken down monthly or quarterly for the first year, and then annually. Financial statements include your income statement, balance sheet, and cash flow statement.
A profit and loss statement is more commonly called an income statement. It shows your revenue and subtracts your expenses to determine whether you were profitable or not.
As you develop your income statement, you need to develop assumptions. Will you serve 50 customers per day or 200? Will sales grow by 2% or 8% per year? Your choice of assumptions will greatly impact your business’s financial forecasts. Conduct as much research as possible in order to ground your assumptions in reality.
Create a financial statement for your franchise business by downloading our free income statement templates.
While balance sheets include much information, to simplify them to the key items you need to know about, balance sheets show your assets and liabilities.
The balance sheet shows your franchise business’s net value at a specific point in time. It categorizes all of your company’s financial data into three categories:
The equation that expresses the relationship between these financial data elements is Assets = Liabilities + Equity.
Create a pro forma balance sheet for your franchise business plan that highlights the information in the income statement and cash flow projections. A balance sheet is normally prepared once a year by a company.
Balance sheets indicate your assets and liabilities, and while they contain a lot of information, they are simplified to highlight the most important things you need to know.
For example, spending $500,000 to build out your franchise will not result in instant revenues. Rather, it is an asset that should help you earn money for many years to come.
Similarly, if a bank sends you a check for $200,000, you do not have to pay it back right now. Rather, that is a liability that you will repay over time.
Cash Flow Statement:
Your cash flow statement will help you determine how much money you need to start or grow your franchise business. In developing your Income Statement and Balance Sheets be sure to include several of the key costs needed in starting or growing a franchise business:
Create a financial statement for your business by downloading our free balance sheet templates.
List any additional material you cannot include elsewhere, such as resumes from key employees, licenses, equipment leases, permits, patents, receipts, bank statements, contracts, and personal and business credit histories.
Attach your full financial projections along with any supporting documents that make your plan more compelling in the appendix.
Bonus Tip: Learn what to include in a business plan appendix when writing a business plan.
A franchise business plan is a worthwhile investment. As long as you follow the template above, you will become an expert in no time. By following the template, you will understand the franchise business, your competition, and your customers. The plan will help you understand the steps necessary to launch and grow your franchise business.
Wouldn’t it be nice if your business plan could be completed faster and easier?
With wise business plans Business Plan Template, you can finish your franchise business plan in just 6 hours or less with a 30-Day Money-Back Guarantee!
Also, you can download our 300+ free business plan templates covering a wide range of industries.
OR, we can create your franchise business plan for you
Since 2010, Wise business plans’ MBA professional business plan writers has developed business plans for thousands of companies that have experienced tremendous success.
We will show you some real-world business plan examples so you may know how to write your own, especially if you are seeking a bank loan or an outside investment and need to use SBA-approved formatting.