how to make a franchise business plan

A complete franchise business plan must contain the following parts:

1. Executive Summary The Executive Summary is the most important part of your business plan. ...
2. Company Analysis Use this section of the business plan to provide details of the type of franchise you are operating. ...
3. Market and Industry Overview ...
4. Customer Analysis ...
5. Competitive Analysis ...
6. Sales and Marketing Plan ...
7. Operations Plan ...
8. Management Structure ...

Full Answer

Do I need a business plan to buy a franchise?

To get the money you need to open a franchise, you will need a solid business plan. Read how to write a good business plan that will also guide you in staying on track as your franchise grows. Industry Industry

What should I consider before buying a franchise?

Ten Things To Consider Before Buying A Franchise

• What's the story on the franchisor's business record and reputation?
• Have you spoken to existing franchisees?
• Have you contacted government consumer protection agencies, Canadian Franchise Association and your local Better Business Bureau?
• Is the franchisor's infrastructure comprehensive and stable?

More items...

What to consider before buying a franchise?

What to Consider Before Buying a Franchise

• Make Sure Your Family is On Board. Owning a franchise—or a business of any kind—is truly a family affair. ...
• Count Your Cash. ...
• Reach Out to Other Franchisees. ...
• Do Some Soul Searching. ...
• Test the Product. ...
• Understand What You’re Getting Into. ...
• Talk to a Franchise Consultant. ...
• Come Up With an Exit Strategy. ...
• Consult With Franchise Experts. ...
• Do Your Due Diligence. ...

How to evaluate a franchise business plan?

Making a Choice

• First, you must believe in the product or service that the franchise network delivers. Is the niche stable, expanding, long-term, saturated??
• Next you must verify the industry’s future. What do the trade papers predict? ...
• Determine the earnings capability. ...
• You should call them to get their confirmation of your projections. ...

Why do you need a business plan when taking a loan?

Is a business plan intended to get funding?

How do I create a franchising plan?

At a minimum, your franchise business plan must include:An Executive Summary.A company/business description.A description of the company's products and/or services.A market and industry analysis.A competitive analysis.A marketing and sales plan.A management and organization section.More items...

What are the 4 types of franchise arrangement?

Below are four types of agreements franchised businesses commonly form.Single-Unit Franchise Agreement. In a single-unit agreement, the arrangement grants the franchisee the right to open and operate a single franchise unit. ... Multi-Unit Franchise Agreement. ... Area Development Franchise Agreement. ... Master Franchise Agreement.

How much money is required for franchise?

Franchise Fee- Most of the franchisee's fees are somewhere in the range of Rs. 1 lakh to 10 lakhs. At times, you may see franchise fees under Rs. 2 lakhs; these kinds of franchise opportunities are typically home-based or mobile franchise which can be operated on a small scale.

What are the steps to owning a franchise?

Steps to Start a FranchiseStep 1: Research your options. ... Step 2: Select a franchise that aligns with your business goals. ... Step 3: Create an LLC or a corporation. ... Step 4: Arrange financing. ... Step 5: Talk to the franchisors and franchisees. ... Step 6: Talk to members of your community. ... Step 7: Create a business plan.More items...•

What are five examples of franchises?

Franchises can be categorized by different factors, such as investment level, the franchisor's strategy, marketing, operations, relational type, and more....Conversion FranchiseElectricians.Florists.HVAC.Plumbing services.Professional service companies.Real-estate brokers.

What are 5 characteristics of a franchise?

But that would not be enough because it is vital to check the characteristics of a franchise business that you are looking for....Franchisees should know how to:hire.train.purchase.purchase.market.deliver products.make bills.use technology.

Do franchise owners take a salary?

Franchise owners can pay themselves a salary or depending on their business entity, they may be able to take a draw from their accumulated equity.

Do franchise owners make money?

Franchise Business Review found that the average annual pre-tax income of franchise owners in America is $80,000. Only 7% of franchise owners make more than $250,000 annually, and 51% earn less than $50,000. Legally, franchisors cannot give income amounts or forecasts of future income.

Do franchise owners have to work?

Many franchises are set up to run as “semi-absentee” ownership models. This means that the owner does not need to manage the business full time. They can hire people to run the day-to-day operations of the business, while they continue to work for another company – or enjoy more leisure time for family and hobbies.

What are three qualifications to own a franchise?

Some franchise requirements to take into consideration may include:Credit score. Minimum credit scores vary by franchisor, but most consider a grade of 680 or higher as ideal.Net worth. ... Available cash. ... Previous industry experience. ... Management experience. ... Total investment required. ... Ongoing costs. ... Training and support.

Can you buy a franchise with no experience?

Most people don't realize that they can have all of this and more through their own franchise. The best part is that there is no experience or education necessary to owning your own franchise. The only thing that is required is a drive for success.

How long before franchise is profitable?

One common misconception when it comes to operating a franchise is that once you sign on the dotted line and open for business, the customers and revenue will start flowing. This is typically not the case. It normally takes a year or two to become profitable.

What are the 4 types of franchising and give an explanation about it?

Learn the 4 main types of franchise arrangements: single unit, multi unit, area developer and master franchise. The franchising industry is very versatile, with multiple franchises, industry options and investment ranges. In addition, there is a diversity of types of franchise arrangements available.

What are the type of franchising agreements?

There are 4 basic types of franchise agreements: Single-unit, multi-unit, area development and master franchising. A single-unit franchise is the most common and is simply where a franchisor grants a franchisee rights to open and operate one single franchise unit.

What type of business arrangement is a franchise?

Franchising is a kind of licensing arrangement wherein a business owner, known as the "franchisor," distributes or markets a trademarked product or service through affiliated dealers, who are known as "franchisees." While these franchisees own their establishments, terms of franchising agreements typically require them ...

What is the most common type of franchise agreement?

single unit franchiseA single unit franchise is an agreement where the franchisor grants a franchisee the right to open and operate one franchise location. This is the most common and simple type of franchise relationship.

What Is a Franchise Business Plan?

A business plan is a plan to start and/or grow your franchise. Among other things, it outlines your business concept, identifies your target custom...

What Are the Main Types of a Franchise?

About any type of business can be franchised. Franchises are categorized according to different factors like investment level, franchisor’s strateg...

What Are the Main Sources of Revenues and Expenses for a Franchise?

The main source of revenue for franchises are franchise fees and royalty fees. Some also earn from other fees like distribution fees, site assistan...

How Do You Get Funding for Your Franchise?

Among the most common sources of funding for a franchise are commercial bank loans, Small Business Administration (SBA) loans, personal savings and...

Franchise Business Plan Example

Franchise examples can come in a lot of shapes and sizes. Some come with complete turnkey solutions—sometimes including strict franchise agreements that dictate pricing, uniforms, and even employee conduct. Other franchisors take a more hands-off approach, and let the franchisee take control of how they may want to run the business.

How Does a Franchise Business Model Work?

For better or for worse, it’s not easy to say how a franchise operates. Not because there’s some secret magic behind the business plan, but rather because every franchise operates in a different way.

How Does a Franchise Operate?

Every franchise operates in a different way. As we explored above, some offer their franchisees the freedom to develop their own business plan. Others are fairly strict in the way one of their businesses can operate.

What Is a Franchise Business Plan?

A franchise business plan is a plan to start and/or grow your franchise business. Among other things, it outlines your business concept, identifies your target customers, presents your marketing plan and details your financial projections.

What Are the Main Types of a Franchise Business?

The most common types of franchises are job franchise, product or distribution franchise, business format franchise, investment franchise, and conversion franchise .

What are the sources of financing for franchises?

Among the most common sources of funding for a franchise business are commercial bank loans, SBA loans, personal savings and friends and family loans/gifts. There are also lenders that can supplement other loans with equipment financing and business lines of credit.

What are the main sources of revenue for franchise businesses?

The main source of revenue for franchise businesses are franchise fees and royalty fees. Some also earn from other fees like distribution fees, site assistance fees, training fees, technologies, and rebates. The key expenses for franchise businesses are inventory, payroll, marketing and advertising, rent and loans.

What is the key to opening a franchised business?

The key is compiling the proper information to address the reservations of the lenders you will meet with. This is where opening a franchised business offers a notable advantage over an independent business.

What is a franchise disclosure document?

The franchise disclosure document (FDD) provided by the franchisor of the system you are investing in contains a great deal of the information needed to complete a business plan.

What is an appendix in a business plan?

Appendix: The appendix technically isn’t a part of the business plan, but an additional section to present items that would enhance your presentation. Include items you feel would be necessary to giving the lender a complete picture of you and the franchise you are seeking financing for.

Why do you need a confidentiality agreement?

Confidentiality agreement: Because business plans contain sensitive and confidential information, the content needs to be safeguarded against potential leaks. To do this, you will need to enter into a confidentiality agreement with the parties you allow to review your business plan.

What is management structure?

Management structure: This section provides a look at the people who will be responsible for the day-to-day operation of the franchise, particularly you as the owner. Is this venture going to be a sole proprietorship or will there be multiple owners? Explain if you will be involved day-to-day with business operations, or will be acting as an absentee owner.

Why is it important to have a business plan?

Important note: the business plan isn’t just for getting money. Not only does a business plan help in securing funding , it forces you to take a hard look at the investment you are about to make. It gives you a chance to anticipate the challenges that come with opening a business, and temper unrealistic expectations.

Do you need a business plan to be complicated?

Creating a business plan doesn't have to be complicated. There is no standardized length for a business plan, but no lender wants to read a novel-length presentation. The main thing is that the plan is thorough enough to cover all aspects of your individual franchise. You want to give the lender confidence that you are prepared to take on ...

2. Business Structure

All franchise business plans should include this section. This is where you’ll go into depth about how the business is set up, who’s involved, and how it will be run on a day-to-day basis.

3. Products and Services

You may touch on products and services during your intro, but, include a more in-depth section later on.

4. Operations

Your operations section should help investors understand more about your setup.

What is franchise overview?

In your franchise overview, you will break down all the specifics of your endeavor. This is where you will adequately cover the type of franchise you wish to become involved in, the products or services sold, and the franchise history. The business model and legal structure of the franchise are also essential talking points.

Do franchises need a marketing plan?

Every business plan, even one done for a franchise, needs a solid marketing plan. Though you will have assistance with marketing materials and campaigns with the franchises parent company, it’s still essential to set up your own plan focusing on your local environs. What promo’s will you see throughout the year? How often will you be utilizing social media? How much of your yearly budget will you be putting towards marketing? All of these questions should be clearly addressed.

Why do you need a business plan when taking a loan?

This is exactly why you need a business plan. This plan helps lenders in assessing the borrower and the business if it is profitable in the future or not.

Is a business plan intended to get funding?

Yes, the plan is not intended only to get the funding. Instead, it forces you to take the investment seriously and to anticipate the challenges that may happen during the business opening. In other words, it sets your expectations right.