How to Create a Business Plan for Your Franchise - Follow this Guide

how to create business plan for a franchise

Decided to own a franchise?

You may have made your mind about the type of franchise and maybe the franchise brand.

What is next then?

The next step is financing.

You need to secure financing for your franchise unless you have enough money saved to cover all the costs. Otherwise, you may ask a lender to invest the required money needed to open and run a franchise until you make a profit.

To convince lenders that their money would not go to waste, you need to create a business plan. The business plan will guide the lenders to guess whether the prospective franchisee is on the right path towards success or not.

To convince lenders to invest money, you should provide a clear picture of how much money is required to open the business, the process involved, and how the borrowed money will be repaid.

The best way is to schedule a meeting with your lender and prepare a presentation. Conduct the necessary research to back up your stated claims in order to achieve the desired results.

use business plan while dealing with your lender

A business plan is not just about securing money!

Please note that the goal of creating a business plan is not just to get money but a whole plan to guide you on how to open a business and achieve your expectations.

So, a business plan not only helps in securing money but also in deciding how much investment is required to open and run a business.

Once you become the owner of a franchise, the business plan should be updated on and off to achieve the business goals.

What are the Elements of a Business Plan?

Creating an effective business plan is not that difficult if you know what you are doing. There is no standard length but your business plan should not be too long. It should cover all the aspects and give the lender a sense of confidence that you are capable enough to run a business and turn a reasonable profit each year.

The key to creating an effective business plan is to address the reservation of the lender. This is the point that can help you understand the difference between a franchise and a business opportunity.

You can also find a great deal of information in the franchise disclosure document (FDD) to create a perfect business plan.

Here are the common parts of a business plan that you should include.

main parts of a business plan
  • Company/Business Overview

    Provide a thorough description of the franchise business. You can get help from item 1 of the FDD. Here you need to provide a brief overview of the product or service that the company offers, an overview of the market, processes involved, and a summary of challenges.

  • Service/Product Overview

    In this section, you need to provide a detailed description of the product or service that your franchise will provide. You will find a great deal of information in item 1 of the FDD to fill up this section. You can also get help from item 16 to understand what your franchise will and will not be able to sell.

  • Competitive Analysis

    In this section, provide to the lender that you are not jumping into business all of a sudden. Concentrate on a specific location where your franchised business will be located. The location description in item 12 of the FDD will help you to achieve this point.

    You should clearly state how big your market is and what kind of people are involved. Who are your competitors and what is your advantage over them?

    Do not forget to mention what experts are saying about the product or service in terms of changing trends.

  • Management Summary

    Here you need to provide information about the key members of your management team who will be an important part of the day to day operations.

    Outline all the business qualifications and emphasize experiences that are somehow relevant to being successful in the future. You can get plenty of information regarding this in item 15 of the FDD to help you explain the managerial responsibilities of the franchisee.

  • Marketing Plan

    How are you going to target new customers? Provide an overview of your marketing strategies and advertising plan offered to you by your franchisor. You can get help from item 11 of the FDD to find information for this section.

  • Financial Projections

    Here the most important information about your business plan will come. In this section, do not just quote the amount of money you required but provide a clear picture of your financial situation as well.

    Provide a detailed description of how you are going to get the whole initial investment. Often a lender is not financing the whole investment so clearly indicate if you are using your personal loan, savings, etc.

    Provide a timeframe in which the lender can expect repayment of the loan. Include charts and graphs to show the initial costs, targeted profit, sales forecast, etc.

    The franchisor can help you fill-up the information about the cost of starting a franchise or you can also get help from items 5 and 19 of the FDD.

  • Appendix

    The appendix is not a compulsory part but provides additional information to enhance your business plan.

    Include information that you feel important to mention in order to give the lender a clearer picture of you and your franchise.

    Such information includes management figures, media, clippings, tax returns, etc.

best outside source to get information

As stated above, the franchisor is the best resource to help you create your business plan. Additional resources where you can get help from are Bplans.com and general websites such as Small Business Administration to get useful information to create an effective business plan.

Business Plan Examples

Below you can find sample business plans to understand the accepted format and the contents of the different sections of a business plan.

See Sample Business Plans Here

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