How Do You Build a Franchise Business Plan?

The franchise business plan doesn’t have to be scary or pages long; the primary goal is to be thorough and cover all aspects of the business so the potential lender can understand the complete picture and be at ease with the business’s ability to turn a profit. 

The franchisee will need a key piece of information to begin compiling their business plan: the franchise disclosure document (FDD). This is provided by the franchisor and contains all the information needed to write the business plan.  

Company Description

This is where a franchisee provides an overview of the business and its history. Typically, the information needed to write this section of the business plan is found on Item 1 of the FDD. 

Service/Product Description

The service or product the franchise will provide to customers needs to be described in detail. This information is also usually available on Item 1 of the FDD. On Item 16, the franchisee can find what they can and cannot sell as a part of the franchise system they are in. 

Market Analysis

The franchisee needs to prove to the lender that they are in a solid business venture that will make a profit in a reasonable amount of time. The key to doing this is to concentrate on the specific market the franchise business is in. For some additional direction, the franchisee should utilize the territory description in Item 12 of the FDD. 

Management Structure

This part of the plan covers who will be responsible for the “day-to-day” at this franchise location. There will need to be specification as to whether the business is a sole proprietorship or if it will have multiple owners. For help with this section, Item 15 of the FDD explains the managerial obligations of the franchise owner. 

Marketing Plan

How will this business be successful in reaching the right people? This is what the marketing plan details. FDD Item 11 helps address this section, as it provides an overview of the franchisor’s advertising and marketing efforts and a description of the training the franchisee will complete before opening. 

Financials

This section is where a franchisee gives the “big picture” of their financial situation, asks for any money needed and gives a financial projection for the business to estimate a reasonable timeframe for the lender to expect full repayment of the loan.  For assistance with this section of the business plan, defer to Items 5 and 19 of the FDD. 

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