As an aspiring entrepreneur who has chosen the franchising route, you need to be well-prepared for the exciting journey ahead. Franchising opens a world of opportunities to bring your personal and professional aspirations and goals to life.
One aspect of your preparation process will be creating your franchise business plan. But what is this document, do you really need it and what are its requirements?
In this article, we explore the answers to these questions so that you have a solid foundation as you embark on your franchising entrepreneurial journey. Let’s take a closer look.
What is a franchise business plan?
A business plan for a franchise is a living document that contains the road map to your franchise entrepreneurial journey. This concise snapshot of every facet of your business is often presented to lenders as a way of sourcing financing.
However, apart from that, it is also an important element that makes you sit down and deeply take a look at the road ahead by exploring what potential challenges you may face and how you will overcome them. In business ownership, and in franchising in particular, having a solid franchise business plan is a step whose importance cannot be overemphasised.
It’s about visualising and putting down on paper where you envision your business over the short, medium and long term and how you plan on getting there.
Do you need a business plan for a franchise?
A frequently asked question that is asked in franchising is: do you need a business plan for a franchise? The short answer in most cases is yes.
Depending on the financial investment required to purchase the rights to your franchise business, you will most likely need additional financing apart from your own liquid capital, which means that you’ll need to approach a lender.
That’s why a business plan for a franchise is necessary. However, by forcing you to think deeply about the future of your business, you are also helping yourself to anticipate potential challenges and ways of overcoming them so that your franchise business is as successful as possible.
Therefore, a franchise business plan is necessary not only to present to lenders who may offer you financing but also for the future success of your business.
How to make a franchise business plan
If you are wondering how to make a franchise business plan, it is essential to note that this document requires the inclusion of several compulsory sections to show lenders that you have done your homework and are well-prepared.
That’s why when it comes to the question of what does a business plan for franchise need to include, the answer lies in the following key sections, each of which should be thoroughly fleshed out and analysed for greater potential success:
- Executive summary
Although the executive summary is usually the first page of your franchise business plan, it’s often written last. This page of your business plan should offer the reader a comprehensive snapshot of your business and business objectives as well as how you plan on achieving them.
- The business vehicle you plan to use
Be sure to identify the type of business you will run because different business “vehicles” offer different advantages as well as disadvantages. For example, a sole proprietor is often personally liable for the business’ debts and liabilities while personal responsibility is excluded from a corporation. Belvoir insist on a Limited Company to operate a franchise
- Franchisor profile
Put together research about the specific franchise whose ranks you’d like to join. Study their mission, vision and values, outline when they were established, where they operate and how successful they have been since inception. Also do a strengths, weaknesses, opportunities and threats or SWOT analysis to determine any potential challenges and opportunities for future growth.
- Competitor analysis and market research
Study the local, regional and national competitive environment of your chosen franchisor as well as the market and demographics of your target audience. Make sure to outline who the competitors are, what their unique selling points (USPs) may be, how they market themselves and what strategies they use to gain customers. With regard to the market research, it’s also important to study the local area where your business will be positioned and whether there is a sufficiently large clientele to serve.
- Identify the product or service to be marketed and sold
Let the lender know what industry you’ll be operating in and which product or service you will market and sell. Any relevant product/service history and USPs should be emphasised as should the way in which products are manufactured or services executed. Focus on price, location, benefits, market, etc.
- Your team and management structure
Detail all the necessary information about the personnel you will hire at your franchise business. As a critical asset, you may also want to include the experience and work history of your management team as well as add copies of their CVs to your business plan (this should be attached to the Appendix section). Mention personal attributes, strengths, commitment, skills and value each person brings to the team.
- Your sales and marketing plan
Make sure you have a detailed and comprehensive marketing plan. Be sure you know precisely how you will market your products, to whom and how. Identify relevant marketing channels and the budget you will spend on its execution. Examples may include creating a website, landing pages for pay-per-click (PPC) campaigns, social media (organic and paid), search engine optimisation (SEO), etc. Other important elements to consider include where and how your product will be positioned in the market in terms of price, quality, visuals, etc. You should also identify key performance indicators that you can evaluate your efforts against.
- The operation
Because franchising offers a business-in-a-box solution through a proven business model that’s been tried and tested, your franchise operations should be aligned with those of the franchisor you will be working with. As such, your franchise business operations should “mirror” the franchisor’s operations. In this section, you’ll want to include your sources of supply, labour and materials. Identify the resources required, making sure to distinguish between what you have and what you still need to acquire. Mention critical procedures and their alternatives. Outline your base of operations. Health and Safety policies should be clearly mentioned, too, as should your infrastructure – both current and expected.
- Financial information
This is the crux of your business plan and should not be taken lightly. Here, you need to create a forecast for profit or loss for the upcoming year. You should also mention whether you’ll need financing, how much and for which purposes. Also worth mentioning is your anticipated break-even point that is shown as a percentage of your anticipated sales. Your basic income should be included as well. Further elements to include apart from the profit and loss forecast include: a cash flow forecast, a breakdown of expenses (product, labour and overheads), sales, etc. It’s important to be both realistic and conservative while thinking both short, medium and long term.You may seek assistance from a lending broker or the franchisor or your accountant
Finally, the Appendix is where any additional information that could take up a lot of valuable space is positioned. It serves as a reference point for lenders who may wish to explore any aspect of your franchise business plan in more detail. Remember that there may be restrictions in your Franchise Agreement. You may be able to attach this or a template.
Armed with the knowledge of how to create your franchise business plan, you’re now ready to begin your drafting process.
And if you’re still at a stage where you’re considering various franchise opportunities, we invite you to explore the Belvoir Franchise Group’s opportunities to become a franchisee.
In the lucrative property industry, with us you’ll stand head and shoulders above the rest as we guide and coach you into creating your own successful business going forward.
Speak to our team about how we can help turn your entrepreneurial aspirations into reality. Get in touch with us today!