Creating a franchise business plan
“Without a plan, even the greatest business can fail. You need to have goals, set milestones, and create a strategy for success.”Yogi Berra (American professional baseball catcher and entrepreneur)
A business plan is an essential document for any business. It sets out the business's objectives and offerings, how the business will run on a day-to-day basis, sales and marketing strategy, management team and key people, financial projections and goals, etc. Having a clear plan keeps your business on track and moving forward, helps you make strategic decisions as your business grows, provides a measure of success, and is also an essential tool if your business is looking to secure funding.
For potential franchisees who want to invest in a proven business model that already has systems and processes in place, creating a business plan may seem like a waste of time and effort. However, in fact, quite the opposite is true. Developing a detailed franchise business plan is an extremely worthwhile exercise. Doing so will help you determine whether franchising is the best business investment for you, financially and otherwise.
However, the process of writing a franchise business plan as a potential franchisee is different from the process of writing a business plan for an independent start-up. There are certain facts and figures that are already known and established. The franchisor provides a lot of information about products and services, processes, systems and financials. The franchisee must then evaluate these and adjust them, if necessary, to suit the local market and proposed territory.
Creating a franchise business plan doesn't have to be a complicated task, but it's important that your plan covers these key considerations:
History of franchises and core business
What is the franchise structure, company background, mission statement, what products or services are offered? Who is the franchise's target market?
Evaluating the brand's key strengths and weaknesses
What is your brand's USP (Unique Selling Proposition)? What motivates consumers to purchase your product or service? How are market trends and consumer buying habits evolving and how might this positively or negatively impact your franchise and its offering?
Your background, experience and skillset
What attracted you to this franchise business and what skills and experience do you plan to bring to the table to run a successful business? Aside from the franchisor's own training program, are there any additional qualifications or requirements you need to run a successful business?
Local market analysis
What is the geographical area in which your franchise will operate? What are the demographics of the area in relation to your franchisee's target customers? In simple terms, why is the proposed area an ideal location for your franchise?
Analysis of local, regional and national competition
Who are your competitors in the market? How does your franchise business stand out from the competition and what competitive advantage does it have?
Your franchise plan – how you want to grow and what goals you want to achieve
Any business plan should always be reviewed periodically. It is important to realize that this type of plan is not immutable. It is a roadmap to move your business forward, but changes in circumstances, markets, financial conditions, and various other circumstances may require changes in direction and strategy. However, your franchise business plan should clearly outline the short-term and long-term goals of your business and ensure that they are specific and quantifiable.
Management and personnel planning
Franchise opportunities vary greatly in size, from an owner-operator model to franchises requiring a larger team. Identify who will be involved in both the management and day-to-day running of the franchise business, what skills and qualifications they will need, and how you will conduct your recruitment efforts to secure the right talent.
Sales and Marketing Strategy
Your franchisor will of course undertake national marketing activities. But on top of that, how do you reach your local target market and attract them to your business? What training, support and resources will your franchisor provide to help you do this? What sales and marketing objectives will you set as part of your strategy?
cost
What will it cost to buy a franchise and start operating? How will you raise the investment capital? Do you need to apply for financing? Most of this information will be provided by the franchisor, but be sure to analyze it closely and be aware of “hidden costs.” Talking to existing franchisees can help you in this regard.
Financial Forecast
This is often the most difficult part of any business plan – projecting the financial performance of the business in line with the franchise's short-term and long-term goals. This should include an analysis of projected revenues, costs, and profits for years 1, 2, 3, and beyond. Looking at the performance of other franchises in your network can help you put these numbers together. When putting together these projections, it's important to be realistic and conservative, and to take into account seasonal fluctuations.
Investing the time to research and write a franchise business plan is the first step in your franchise business journey. But once you're done writing it, don't just tuck it away in a desk drawer and forget about it. Your franchise business plan is just as important as the growth and development of your business. Treat it as a living document that will measure if and when you're achieving your business milestones, help you make decisions along the way, and keep you on the path to success.
