How to Create a Franchise Business Plan

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.