Franchise meeting

How to Create a Franchise Business Plan

What You’ll Find In This Article

As a franchisee, you’re following a franchisor’s proven playbook to grow your business. But your business will probably need more support than just a franchise plan. 

You need to take your franchise to the next level. Whether you need to secure financing from a lender or you want to plan for the future, it’s always a good idea to write a franchise business plan. 

A good business plan will show the potential of your business, outlining a well-researched path to profitability for interested investors, lenders, employees, journalists, and other stakeholders. A bulletproof franchise business plan will help you secure the funding you need while giving you a proven roadmap for success. 

Understand why a franchise business plan can make or break your business and the 6 must-have components your plan should include. 

What Is A Franchise Business Plan?

Although you probably have some kind of plan for your franchise company, a franchise business plan is a formal document that you can share with others. It should serve as an overview of your franchise as it stands today and include a plan for success over the next 10 years. 

Most franchise business owners update their business plan at least once a year, but you might also need to update yours as the industry changes. 

Your business plan needs to be comprehensive and cover everything from market research to financial information. There’s no standard length for a business plan, but it does need to be digestible! You’re going to share this document with other people who want to learn about your franchise, so make your business plan clear and succinct.

Fortunately, most of the hard work is already done for you under the franchising model. Your franchise agreement, franchise disclosure document, and training documents should include most of the components you need. Since your franchisor benefits from your success, feel free to collaborate with them to write a better franchise business plan. 

Why Should Franchisees Have a Business Plan?

But why do you need a formal business plan, anyway? Isn’t a strategy enough? 

The issue is that the world needs to know about your business. Journalists, lenders, investors, and countless others need to see a franchise business plan to better serve your business. A strong franchise business plan will help you accomplish three things.

1 – Secure Funding

Do you need funding to pursue a new business opportunity? Cash flow is a must to get your business off the ground, but funding isn’t easy to come by. Whether you’re applying for a loan or pitching angel investors, they’ll ask to see your franchise business plan first. 

Investors and lenders want to see that you’re worth their investment. A franchise business plan demonstrates that you have a plan to make your franchise profitable—and sound judgment. A good business plan will make it easier to secure the funding you need, fast.

2 – Create A Proven Path Forward

A franchise business plan isn’t just for outsiders. As a franchisee, you can use your business plan as a roadmap for your business. It’s the difference between having a plan in your head and mapping out a well-researched strategy on paper. Customer research, competitor analysis, and financial data will help you run a better, more profitable franchise. 

3 – Manage Your Money and Timetable More Effectively

What are your goals for the next 5 – 10 years? Without a plan, you’re aimlessly managing a franchise without a destination. A franchise business plan sets a timetable and measurable goals in place for your new location. With a little research and foresight, a business plan helps you better manage your money and your time.  

What Should My Franchise Business Plan Include?

It usually takes hours of research to write a business plan. Fortunately, you’re part of a franchise system, so a lot of the work is already done for you. Tap your franchisor to help you write a well-rounded franchise business plan that gets results. 

You can capture a holistic view of your business by including these 6 sections in your franchise business plan. 

1 – Summary

The executive summary, or introduction, is the first thing people see, but you should write it last. This section summarizes the entire franchise business plan. The goal of this section is to give people a high-level understanding of your business. It should encourage people to learn more about your franchise location.

You don’t need to go into too much detail in the introduction, but you should touch on topics like: 

  • Industry overview
  • Your franchise history
  • The products or services you sell
  • A quick overview of your marketing plan
  • A summary of your financial information (and funding needs, if any)

After reading the summary, people should know who you are, what you do, how you’re different, and your goals for the franchise.

2 – Franchise Overview

The franchise overview is different from the summary section because it delves into the specifics of your franchise. You need to include information like: 

  • The type of franchise you operate. 
  • Your business model.
  • Your legal structure. 
  • Product or service descriptions. 
  • The franchise’s history. 
  • Milestones you’ve achieved to date. 

3 – Industry Overview

How does your franchise operate in the context of your industry? In this section, give an overview of industry trends, consumer demand, and the competitive landscape. 

This should include data like: 

  • Annual sales in your industry per year for your franchise location.
  • Local market size.
  • The growth or shrinking of the industry. 
  • Emerging trends.
  • Forecasted industry growth for the next 10 years.

The industry overview is a great way to show consumer demand for your franchise in your area, as well as interesting trends you plan to use to your advantage. 

4 – Competitive Analysis

Who’s competing against you? No matter how unique you think your franchise is, you definitely have competition. A competitive analysis takes an in-depth look at your direct competitors and highlights how you’re different. 

Assess each competitor’s: 

  • Customer demographics
  • Pricing
  • Weaknesses
  • Strengths 
  • Product features

Based on your research, you should explain how your franchise is different from competitors, whether that’s in terms of product features, faster service, or cheaper pricing. 

5 – Marketing Strategy

You’re running a franchise, so there’s clearly a demand for your business. However, you still need a marketing strategy in your franchise business plan that outlines how you’ll attract customers. 

Think through how, exactly, your business will bring customers in the door. Your marketing strategy should include:

  • Customer analysis and demographics. 
  • Promotion strategies for social media, advertising, influencer marketing, etc. 
  • Marketing campaign details and a per-campaign budget.

6 – Finances

Your franchise business plan should also touch on your finances. Paint a picture of your franchise using accurate financial information. That means including (if available) 5 years of financial statements on a monthly, quarterly, and annual basis. 

Include your profit and loss statements (P&Ls), balance sheets, and cash flow statements. If this sounds intimidating, work with your franchisor, CFO, or accountant to compile all of your financial data. 

The purpose of this section is to share financial projections. Be very conservative and realistic with these projections; you should give lenders and investors honest insight into how long it will take to generate ROI on their investment.

Plan For Successful Franchising

What does the future look like for your new franchise?

Treat your franchise business plan as an opportunity to become an expert on your business, industry, competitors, and finances. Be sure to cover these 6 areas in your franchise business plan to secure funding, improve investor confidence, and increase profitability over time.

Instead of flying blind, take the time to write a franchise business plan. You’ll secure financing more quickly and make better decisions with a solid roadmap backing your business.

Everything You Need To Know On How To Start a Franchise

Thinking of becoming a franchisee? We’re here to help you through the steps of starting a franchise!

14 Questions to Ask When Buying a Franchise

Have you ever wondered what questions to ask a franchisor, what questions a franchisee might be asked?

How To Open A Franchise Restaurant

Before signing your franchise agreement, understand how the franchise model works and the pros and cons of franchise restaurants.

What Does a Franchise Broker Do?

Do you need some help finding the best franchise to invest in? Learn more about the benefits, costs, and risks of working with a franchise broker!

How Do Franchises Make Money

Before owning a franchise, it’s vital to understand how franchises make money, how much do franchise owners make, and learn from the most profitable franchises.

Top Entertainment Franchises That Are Growing

The entertainment franchise industry is in full swing as the world rebounds from COVID-19.

What is the Difference Between Franchisor vs. Franchisee?

What You’ll Find In This Article What is the Definition of Franchisee?What is the Definition of Franchisor?What is the Role …

11 Songs About Hotels

What You’ll Find In This Article What Are Some Songs about Hotels? Hotel California – The Eagles Heartbreak Hotel – Elvis Presley Holiday …

What are Franchise Royalty Fees?

Franchise fees include the initial franchise fee and the franchise royalty fee. These fees are typically paid monthly but sometimes are paid weekly.

What’s the Difference Between a Corporation and a Franchise?

The management styles behind a corporation and a franchise are what differentiates the two business models.

What is a Franchise Discovery Day?

What You’ll Find In This Article Can Anyone Attend a Franchise Discovery Day?How to Prepare for Discovery DayWhat Questions Should …

What is the Difference Between Franchising and a Partnership?

What You’ll Find In This Article What is the Definition of a Franchisee?What is the Definition of a Partnership?General PartnershipsLimited …

What is Franchise Insurance?

What You’ll Find In This Article How Does Franchise Insurance Work?Types of Franchise InsuranceProperty InsurancePublic Liability Insurance Product Liability Insurance General Liability …

What is a Franchise License?

What You’ll Find In This Article What is the Difference Between a Franchise and a License?State Licensing RegulationsWhat are the …

How to Become a Franchise Consultant

What You’ll Find In This Article What Does a Franchise Consultant Do?What are the Qualifications to be a Franchise Consultant?Steps …

What is the Difference Between Franchising and Company Owned?

What You’ll Find In This Article What is the Definition of Franchising?What is the Definition of a Company Owned Store?What …

What is an Area Representative?

What You’ll Find In This Article What is the Difference Between Area representatives and Master franchisors? How a Franchise Area Developer …

What is the Difference Between Franchising and Opening a Small Business?

What You’ll Find In This Article What is the Definition of a Franchise?What is the Definition of Small Business?What is …

How to Open a Gym Franchise

What You’ll Find In This Article What are the Benefits of Owning a Gym Franchise?Starting a Gym FranchiseHow Much Does …

COVID-19’s Effect on the Health and Beauty Industry

The health and beauty industry had a crucial role in protecting citizens during COVID-19. Find out how the coronavirus hit the health and beauty industry and how it bounced back!

How the Franchise Model Works

To enjoy the benefits of the franchise model, it’s essential to understand the different types of franchise models and how they work.

How to Evaluate Franchise Opportunities

Is this franchise opportunity right for you? We’ll explore the steps to evaluating a franchise opportunity, and how to decide between an established or emerging franchise.

How to Become a Franchise Owner

Investing in a franchise is a great way to start your own business. We will explore how to become a franchise owner and break down the paths to, risks, and benefits of owning your own franchise.

How to Reduce Your Carbon Footprint In Business

Running a business is one thing, but running an ecologically friendly business while staying profitable takes things to the next level. Here’s a short guide on how to reduce your carbon footprint in business.

The Differences Between a Chain and a Franchise

We break down the differences between a chain vs a franchise, so you can figure out which business is best for you.

How to Create a Franchise Business Plan

Understand why a franchise business plan can make or break your business and how to create a franchise business plan.

How Much Do Franchise Owners Make

Have you ever wondered how a franchise owner makes money? Is the risk worth the investment? Find out how franchisees get paid in our guide.

How to Get a Loan for a Franchise

To succeed at their new business, franchisees will need to have a steady cash flow and franchise financing options to ride the waves of the initial economic storm.

What’s the Difference Between a Franchise and a License?

While licensing is a broad term that encapsulates franchising, there are several licensing agreements available to prospective firms.

What You’ll Find In This Article