Creating a franchise business plan from scratch can be crucial without knowing the seven key elements. Using the right components can help you start your franchise business and apply for funding.
A business plan is not only a written document that narrates the core detail of your 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.
For you to learn more, this post will introduce the seven elements needed when writing franchise business plans. So even without a business degree, you can write a convincing one.
After learning the parts you need to include in your written plan, you are now ready to get funded, start your business, and grow. So let’s get started by knowing these 7 franchise business plan elements.
What are the 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. Those materials provided to you can help you start writing your franchise business plan. Your franchisor can be an extra help in the writing process as well.
When you create a concise one could lead to getting a source to finance your business. So, let’s begin by knowing the elements you’ll need.
1. Executive Summary
You will start your franchise business plan with an overview or summary of the essential information you are providing in your franchise business plan.
As it will explain your business, the executive summary section should answer the following questions:
The executive summary is the reader’s first impression of you, your business, and your business plan. It is a written version of your business pitch. It should clearly define your business 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. It should only reference material that you’ve provided in the business plan and use appropriate language for your target audience.
2. Business Description
The business description section of the franchise business plan summarizes your business. This section should contain your:
While you don’t need to provide detailed financial data, you should include an overview of your industry, fiscal projections, and relevant business facts.
You should include company goals in your business description. 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. Avoid ambiguous terms. 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, you need to do the following:
Gaining an understanding of your competitors through your competitive analysis helps you develop an effective strategy for the success of your franchise business and helps you get potential funders.
4. Marketing Plan 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.
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.
5. Operations and Management
This section 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 your research behind your strategy.
The operation and management section of your franchise business plan highlights the day-to-day operation of your business. It covers not only the business operations but emphasizes the responsibilities and tasks of the franchise owner.
This section 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 business, Item 15 of the FDD will explain more.
6. Financial Plan
The financial data portion of your business plan should reflect and expand upon any facts and figures previously mentioned in your business plan, including your executive summary. This section provides:
If you’re starting your business with a franchisor, you can reference your Franchise Disclosure Document for this information.
7. Pro Forma
The pro forma is similar to the financial data section. But this section focuses more on the three main accounting statements, which are:
You can create your pro forma in four steps:
1. Create a chart of accounts.
2. Calculate your business projected income.
3. Project your liabilities and cost.
4. Estimate cash flows
Consider speaking with an accountant or financial advisor to verify your estimates and validate your proposal to lenders.
A franchise business plan is a critical piece in accessing capital.
Apart from your personal savings, you can get funding for your franchise business plan through these sources:
Read the “Franchise Financing: The 3 Best Options” blog to learn more.
In order to fulfill well-written franchise business plans, you should provide the required information for each section. And you are more likely to receive the capital you need for your start-up franchise business.