Whether you are purchasing a franchise business or expanding your current one, finances will always play a major role. To secure financing from lenders, it is necessary to prepare a franchise business plan.
However, it’s essential to have a solid understanding of the seven key elements in order to create effective franchise business plans.
A franchise business plan is not only a written document that narrates the core details of your independent business but also has a list of your objectives. It also includes the operations, the marketing strategy for growing your business, as well as the financial projections, including franchise fees. It’s crucial to address any pending request, ensuring a smooth and transparent process in the development and execution of your franchise strategy in your business plan.
For you to learn more, this post will discuss each of the seven elements needed when writing franchise business plans. So even without a business degree, you can write a convincing one.
Next Section, let’s get started by knowing these 7 franchise business plan elements.
7 Elements of a Successful Franchise Business Plan
After signing the franchise agreement, your franchisor will give you the marketing plan and other start-up information. The materials provided to you can help you start writing your franchise business plan outline. In many cases, franchisors will guide their franchisees in the writing process.
Next section, when you create a concise franchise business plan template could lead to getting a financial source to start a franchise or grow your existing franchise. So, let’s begin by knowing the elements you’ll need.
1. Executive Summary
- Which service, product, or need, does your business serve?
- Is your business unique?
- How will you ensure your company’s success?
- Is your personal savings enough to invest a business?
- What skills do you possess that will help the business excel?
The first part of your franchise business plan outline is the overview or summary of the essential information you are providing in your new franchise business or current one.
As it will explain your business, the executive summary section should answer the following questions about your franchises:
Business plans’ executive summary is the readers’ first impression of your franchises. It is a written version of your business pitch. It should clearly define your franchises and everything it has to offer in a way that distinguishes your concept.
The executive summary should read as a separate document to introduce your business plan template. It should only reference material that you’ve provided and use appropriate language for your target audience.
2. Business Description
The business description section of the franchise business plan template summarizes your business. This section should contain your:
- company’s structure,
- mission statement,
- history,
- and future projections.
While you don’t need to provide detailed financial data, you should include an overview of your industry, financial projections, personal savings, tax returns, and relevant business facts in your business plan.
Next section, you should include company goals in the business description of your franchise business plan. The business description is your opportunity to share short and long-term objectives for your business with your reader.
Make sure your business goals are reasonable and quantifiable. Learn from other franchisees, and avoid ambiguous terms on your franchise business plan template. Use specific language and time frames to precisely explain what you plan to achieve.
3. Competitive Analysis
A competitive analysis section is also included in any franchise business plans. It involves determining your competitors, both direct and indirect, and your deep research will help you understand your weaknesses and strengths vs. them.
To have a handful analysis of your competitors in the business in your business plan, you need to do the following:
- Select ten direct and indirect competitors to compare.
- Conduct research about their marketing efforts and product features.
- Then compare the gathered details to yours.
Gaining an understanding of your competitors through your competitive analysis helps you develop an effective strategy for the success of your franchise business plan and helps you get potential funders.
4. Marketing and Sales Plan
This section of your franchise business plan highlights your business’s strategy for building and maintaining a customer base and demand for your business. Thoroughly explain how you plan to advertise, your current advertising, and the research behind your strategy.
Next section, you can use the information from the required franchise training, which is the detailed information stated in Item 11 of the FDD or Franchise Disclosure Document.
So how to write a marketing plan and sales plan or your franchise business plan outline? Here are some steps to follow when creating these plans:
1. Define your target audience
Perform a market analysis to identify the specific demographic or customer segment that you should focus on with your marketing and sales plans. This will help you tailor your messaging and tactics to appeal to your ideal customer in your business plan.
2. Set marketing goals
Establish specific, measurable marketing goals that align with your franchise business plan template objectives. For example, you might set a goal to increase website traffic by a certain percentage or generate a certain number of leads through a marketing campaign.
3. Develop a marketing strategy
Outline the tactics you’ll use in your business plan to reach your target audience and achieve your marketing goals. This might include digital marketing, social media advertising, email marketing, content marketing, or other tactics.
4. Create a sales strategy
Determine how you’ll sell your franchise product or service to your target audience in your business plan. This includes setting up a sales team, developing a sales process, or leveraging existing relationships to generate leads.
5. Identify key performance indicators (KPIs)
Define the metrics you’ll use in your business plan to measure the success of your marketing and sales efforts. This includes metrics such as conversion rates, cost per lead, or revenue generated from marketing campaigns.
6. Set a budget
Determine the personal savings you’ll need or plan to execute for the marketing and sales of your franchise businesses in your business plan. This might include allocating funds for advertising, marketing technology, or sales personnel.
Take the time to develop a thoughtful and comprehensive franchise business plan template that reflects your unique business and target audience.
5. Operations and Management
The operation and management section of your franchise business plan template focuses on the daily operations and activities of your existing franchise businesses.
It encompasses not only the core business operations but also highlights the specific responsibilities and tasks, with a particular emphasis on your role as the owner in your business plan.
As you consider the ownership structure for this venture in your business plan, it is important to determine whether it will be a sole proprietorship with you as the sole owner, or if there will be multiple owners involved.
This section of your franchise business plan also includes the company’s staffing, logistics, and solutions to potential problems that could occur in the operation of your business. To know further details about your obligation as manager of your franchise businesses, Item 15 of the FDD will explain more.
6. Financial Plan
The financial data portion of your franchise business plan should reflect and expand upon any facts. Also, the figures previously mentioned in your business plan template, including your executive summary. This section provides:
- hard numbers for your business costs, including your franchise fees, initial costs, etc.
- current funding,
- and expected funding necessary in the future.
To obtain more information when starting a franchise business plan template with a franchisor, you may refer to the Franchise Disclosure Document (FDD).
7. Pro Forma
The pro forma is similar to the financial data section. But this part of the franchise business plan template focuses more on the three main accounting statements, which are:
- the balance sheet
- the cash flow
- and the profit or loss
You can create your pro forma in four steps in your business plan:
1. Create a chart of accounts.
2. Calculate your business projected earnings.
3. Create financial projections
4. Estimate cash flows
Consider speaking with the right person, such as an accountant or financial advisor to verify your estimates and validate your proposal to lenders.
Keep your Franchise Business Plan Updated!
Keeping franchise business plans updated is essential to ensure that they remain relevant and effective in guiding your franchise businesses’ growth and success.
Here are some steps to help you keep your franchise business plan up to date:
Regularly Review Financial Performance
Continuously monitor and analyze your franchise businesses’ financial performance. Compare actual financial results with the projections outlined in your business plan. Identify any discrepancies and assess the reasons behind them. Adjust your financial projection and strategy accordingly.
Customer Feedback and Market Research
Collect and analyze customer feedback through surveys, reviews, and direct interactions in your business plan. Use this feedback to improve franchise businesses’ products, services, and customer experience. Incorporate the insights gained from market research into your business plan to refine your strategies.
Assess and Adapt Marketing Strategies
Review your marketing and advertising strategies regularly in your business plan. Evaluate the effectiveness of different marketing channels and campaigns. Adjust your marketing plan based on what is working best to reach your target audience and achieve your goals.
Evaluate Operational Efficiency
Continuously assess your franchise’s operational processes and efficiency. Look for ways to streamline operations, reduce costs, and improve productivity. Update your operations plan in the business plan to reflect any changes or enhancements.
Revisit and Revise Goals
Periodically review and reassess your short-term and long-term goals. Are they still aligned with your vision for the franchise? Adjust your goals as necessary and update your business plan with these revisions.
Seek Professional Assistance
Consider working with a franchise consultant or business advisor who specializes in franchise operations. They can provide expert insights and help you update your business plan outline effectively.
Conclusion
In conclusion, beyond relying solely on your personal savings, there exist multiple avenues to secure funding, such as bank financing, Small Business Administration (SBA) loans, franchise fees, franchisor programs, and various lending sources in your business plan.
To furnish lenders with a comprehensive understanding of both yourself and the franchise opportunity you aim to finance in your business plan, it is imperative to include essential elements such as management resumes, tax returns, media clippings, and other pertinent documentation.
By addressing these requirements proactively of your franchise business plan, you can expedite the financing process, minimizing delays in launching your franchise.
It’s worth noting that many franchisors mandate prospective franchisees to submit a franchise-specific business plan template as part of their application process. Therefore, it is advisable to ensure your plan aligns seamlessly with their stipulated requirements and guidelines.
To learn more about franchise businesses and business plan, talk to a franchise consultant.
