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Franchise Business Plan Template

Written by Dave Lavinsky

Franchise Business Plan Outline

  • Franchise Business Plan Home
  • 1. Executive Summary
  • 2. Company Overview
  • 3. Industry Analysis
  • 4. Customer Analysis
  • 5. Competitive Analysis
  • 6. Marketing Plan
  • 7. Operations Plan
  • 8. Management Team
  • 9. Financial Plan

Start Your Franchise Plan Here

Franchise Business Plan

You’ve come to the right place to create your business plan.

We have helped over 10,000 entrepreneurs and business owners with how to create a franchise business plan to start or grow their franchises.

How To Write a Franchise Business Plan & Sample

Below is are links to each section of a franchise business plan example to help you start your own franchise business:

  • Executive Summary – This section provides a high-level overview of your business plan. It should include your company’s mission statement, as well as information on the products or services you offer, your target market, and your business goals and objectives.
  • Company Overview – This section provides an in-depth look at your company, including information on your franchise’s history, franchise business model, ownership structure, and management team. You will also include a copy of your franchise agreement.
  • Industry Analysis – In this section, you will provide an overview of the industry in which your franchise will operate.
  • Customer Analysis – In this section, you will describe your target market and explain how you intend to reach them. You will also provide information on your customers’ needs and buying habits.
  • Competitive Analysis – This section will provide an overview of your competition, including their strengths and weaknesses. It will also discuss your competitive advantage and how you intend to differentiate your franchise from the competition.
  • Marketing Plan – In this section, you will detail your marketing strategy, including your marketing initiatives and promotion plans. You will also discuss your pricing strategy and how you intend to position your own business in the market.
  • Operations Plan – This section will provide an overview of your store’s operations, including your store layout, staff, and inventory management.
  • Management Team – In this section, you will provide information on your management team, their experience, and their roles in the company.
  • Financial Plan – This section includes your company’s financial statements (income statement, balance sheet, and cash flow statement). It also includes information on how much funding you require and the use of these funds.

Next Section: Executive Summary >

Franchise Business Plan FAQs

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 customers, presents your marketing plan and details your financial projections.

You can  easily complete your business plan using our Franchise Business Plan Template here .

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 strategy, business operations, and marketing and relationship models. The most common types of franchises are job franchise, product or distribution franchise, business format franchise, investment franchise, and conversion franchise.

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

The main source of revenue for a business franchise 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 franchises are inventory, payroll, marketing and advertising, rent and loans.

How Do You Get Funding for Your Franchise?

Among the most common sources of funding for a franchising business are commercial bank loans, Small Business Administration (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 for franchise businesses.

This is true for a business plan for a franchise restaurant, a business plan for franchise store, or any other franchise business plans.

Where Can I Get a Franchise Business Plan PDF?

You can download our free franchise business plan template PDF here . This is a sample franchise business plan template you can use in PDF format.

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Franchise Business Plan Template

If you want to start a franchise business or expand your current one, you need a business plan.

Over the past 20+ years, we have helped over 10,000 entrepreneurs and business owners create business plans to start and grow their franchise businesses.

Below are links to each section of your franchise business plan template:

Next Section: Executive Summary >

Franchise Business Plan FAQs

What is the easiest way to complete my franchise business plan.

Growthink's Ultimate Franchise Business Plan Template allows you to quickly and easily complete your Franchise Business Plan.

Where Can I Download a Franchise Business Plan PDF?

You can download our franchise business plan PDF template here . This is a business plan template that will help you with how to create a franchise business plan in PDF format.

What Is a Franchise Business Plan?

A business plan provides a snapshot of your franchise as it stands today, and lays out your growth plan for the next five years. It explains your business goals and your strategy for reaching them. It also includes market research to support your plans.

Why Do You Need a Business Plan?

If you’re looking to start a franchise or grow your existing franchise you need a business plan. A business plan will help you raise funding, if needed, and plan out the growth of your franchise in order to improve your chances of success.    Your franchise business plan is a living document that should be updated annually as your business grows and changes.

What Are the Sources of Funding for a Franchise?

Franchises are usually funded through small business loans, personal savings, credit card financing and/or angel investors.

FRANCHISE BUSINESS PLAN OUTLINE

  • Franchise Business Plan Home
  • 1. Executive Summary
  • 2. Company Overview
  • 3. Industry Analysis
  • 4. Customer Analysis
  • 5. Competitive Analysis
  • 6. Marketing Plan
  • 7. Operations Plan
  • 8. Management Team
  • 9. Financial Plan
  • 10. Appendix
  • Franchise Business Plan Summary

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  • Franchise Information
  • Franchise Articles

Creating a Business Plan for Your Franchise: What to Prepare Before Asking for Money

by Franchise Direct

🕒 Estimated Reading Time: ~8 minutes

Creating a Business Plan for Your Franchise

Congratulations! You’ve decided that owning a franchise is the right investment for you. You may have even already decided on the type of franchise, and maybe even the franchise brand you are going to pursue.

What’s next? Financing. Securing the funding needed to make your franchise dreams a reality. And unless you are one of the fortunate people that has enough money saved to cover costs, you will likely be seeking a lender to make up the difference between the amount of money you currently have to invest and amount of money needed to open and maintain your franchised business until you 'break even.' (Breaking even is the point in the lifespan of a business where the operation starts turning a profit.)

To convince lenders that you are worthy of their money, the creation of a business plan is crucial. Lenders use a business plan as a guide to assess whether the prospective franchisee is a on a path towards success and profitability.

To approve loans, lenders want to have a clear, straightforward account of the business to be opened, the principals involved, and—perhaps most importantly—perspective on when the borrowed money will likely be repaid.

It's helpful to prepare for the meeting with the lender like a college graduate student would prepare for a thesis defense presentation. In both instances, it is the goal of the person (or people) going into the meeting to have done the adequate level of research necessary to competently back up the stated claims for the desired result (be it the granting of a master's degree to the student or the gaining of a loan for the prospective franchisee).

Lenders use a business plan as a guide

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.

As time passes and you move further into franchise ownership, the business plan you’ve created should be updated and utilized as a guide in helping you reach your franchise goals.

Parts of a Business Plan

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 the managing of a business that will turn a profit in a reasonable amount of time.

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.

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.

This information includes the company’s corporate background, a description of the target market, the competitive advantage of the product/service, marketing initiatives, plus the start-up and ongoing costs. Some franchisors even offer assistance to franchisees in the preparation of the plan.

Common parts of a business plan include the following, according to the Small Business Administration  (a sample business plan is located at the end of this article):

Company description: A good place to look for the information for this section is Item 1 of the FDD. Provide an overview of the franchise and its history to the lender. You will also provide a brief outline of the franchise’s service/product (more detailed information will be given in the next section).

Service/product description: Describe in detail the service and/or product your franchise will provide to customers. This section can be combined with the company description. Again, Item 1 of the FDD is where you will find much of the information you need for this section. Item 16 will also be helpful in discussing what you will and will not be able to sell as a franchisee of a particular franchise system.

Common parts of a business plan include

Market analysis: Use this section to prove to the potential lender that you are not jumping into a business venture on a whim. Concentrate on the specific area (market) in which the franchised business will be located. The territory description in the FDD (Item 12) will help you to a point.

Give a brief discussion of the following:

  • How big is your market?
  • What kind of people (demographically and financially) make up this market?
  • Is the market under-served in regards to this service/product?
  • If there is competition, who are your competitors and what is your competitive advantage?
  • Discuss what experts are forecasting for the service/product in terms of trends and growth possibilities for your specific market (can include demographic, legislative or environmental factors).

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.

For yourself and all of the others with an ownership stake, if applicable, detail all business qualifications. Stress any and all experience (even if volunteer) that is relevant to being successful in the future with the franchise operation. Item 15 of the FDD will help with explaining the managerial obligations of the franchisee.

Marketing plan: 'How are you going to get customers?' is the main question you’re answering in this section. Use FDD Item 11 to your advantage here. It provides an overview of the franchisor’s advertising and marketing efforts. Also, it provides a description of the training you will complete before opening. Often marketing and sales courses are part of required training.

Financials: This is the meat of your business plan. In this section, don’t only ask for the money you need. Give the lender the big picture of your financial situation as well. Detail how you are going to obtain the entire initial investment. Often times, a lender will not be financing all of the franchise investment. Are you using a mix of personal savings, loans, credit, etc.?

In addition to the funding request, you will be doing some financial projection. Give a reasonable time frame when the lender can expect full repayment of the loan, and back up that claim with figures. Include graphs and charts detailing the start-up costs, projected profit and loss and projected sales forecast for the franchise.

The franchisor can be of significant help to you in completing this section (via Items 5 and 19 of the FDD, and in direct conversation). However, keep in mind the franchisor is restricted legally about making certain claims about projected earnings. Be conservative with the projections as unexpected delays and unforeseen circumstances do happen.

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. Examples include: the resumes of management figures, tax returns, media clippings, etc.

The best outside source of information to complete your business plan is the franchisor

As previously mentioned, the best outside source of information to complete your business plan is the franchisor. No other outlet is going to know that franchise system better. 

Additional resources include online sites such as Bplans.com, which offers site visitors a substantial library of sample plans to review, as well as general business websites like the Small Business Administration. Prospective franchisees can also use a professional business plan writer, particularly for the review of a plan before sitting down with the lender.

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.

The agreement will bind them not to disclose or reveal any confidential information they receive, without your written permission.

Sample Business Plan Confidentiality Agreement Template

Sample franchise business plan: Please note that the example business plan linked below is a sample of one way to format a business plan. There are several different acceptable formats, and the contents of business plan sections will vary significantly due to factors including the franchise system, the type and amount of loan sought, the franchisee’s background, etc.

Sample Business Plan

Suggested reading:

  • The Ultimate Guide to Franchising
  • What is Franchising?
  • The Benefits of Franchising
  • Choosing the Most Profitable Franchise for You
  • 11 Key Steps in Opening a Franchise
  • Franchises vs. Business Opportunities
  • The Cost to Start a Franchise and Financing Options
  • Basics of the Franchise Disclosure Document (FDD)
  • Creating a Business Plan for Your Franchise
  • Completing and Signing a Franchise Agreement

Information Center

  • Ultimate Guide to Franchising
  • Ultimate Guide to Financing a Franchise
  • Ultimate Guide to FDDs
  • FDD Research Hub
  • Franchise News
  • Franchise Reports
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  • Franchise Direct Blog
  • Franchise Success Stories
  • Franchise Exhibitions and Shows
  • Franchise Regulations and Government Action
  • FAQ About Franchising
  • Financing a Franchise
  • Food Franchising
  • Franchise Association News
  • Franchise Company Updates
  • Franchise Costs
  • Franchise Direct News and Notes
  • Franchise Direct Top 100 Global Franchises
  • Franchise Glossary
  • Franchising Your Independent Business
  • General Franchising Industry News
  • Green Franchise Businesses
  • Guide to Buying a Franchise
  • Home-Based Franchises
  • Information for Franchisees
  • International Franchising
  • Introduction to Franchising
  • Market Trends and Stats About Franchising
  • Franchise Marketing
  • Military Veteran Franchise Information
  • Minorities in Franchising
  • Retirees and Franchising
  • Sports and Franchising
  • Women in Franchising
  • Young Entrepreneurs
  • Top 100 Articles
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How to Start a Franchise

Fast food items. Represents starting a franchise business.

9 min. read

Updated January 5, 2024

Franchising offers a pathway to business ownership that takes advantage of a proven idea and strong brand. You lose some autonomy and control—but get to work from an established playbook, learn from a successful franchisor, and, most notably not have to start a business from scratch .

So, is becoming a franchisee the best way to start a business? 

Learn how to choose and start a franchise that fits your interests.

  • What is a franchise?

A franchise is a business owned by an individual (franchisee) but branded and supervised by a larger company (franchisor). Common examples include Subway, 7-11, and Hilton Hotels. 

Purchasing a franchise grants you the right to use a tested business model, pricing, products, and marketing strategies. 

Additionally, franchisees gain access to the company’s trademarked materials like logos and slogans—essential for establishing a brand identity.

  • How to start a franchise

While you get to bypass idea creation , customer validation , and brand development —there are still critical steps unique and similar to starting any other business.

1. Know your budget

There is always an upfront franchise fee, and franchisors often have financial requirements for potential franchisees. For example, some franchisors require franchisees to have a particular net worth.

Review your finances and assets to look for opportunities in line with your price range. Determine how you’ll finance the franchise, whether through personal savings, bank loans, or franchisor financing options.

2. Do your research:

You don’t want to waste time dreaming up your plans to open a specific franchise only to look at the fine print and realize it’s not a good fit.

For example: A Cafe Yumm franchisee must have a net worth of $500,000. If that isn’t where you’re at financially, look elsewhere.

Contact a current franchisee to learn more about the business if you can. What are their perceived pros and cons? What’s it like working with this brand? Are there any significant costs associated with this franchise?

Additionally, you need to check if a franchise is already running in your area. If so, the franchiser may be unlikely to approve another location in such close proximity. 

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3. Participate in an interview

A unique aspect of starting a franchise is that it’s not entirely up to you. You have to interview, almost like you’re applying for a job.

The format will depend on which franchiser you choose. The goal will be for you and the franchisor to review the specifics and determine if the franchise is right for you. 

Take note of how much support the franchisors offer during setup and if they provide ongoing training.

4. Write a business plan

A benefit of starting a franchise is that many important aspects are well-established. However, you still need a business plan to cover how you will run your business, forecast sales and expenses, and outline employee needs.

Most importantly, you need a thorough market analysis that shows how this franchise will work in your local market. At a minimum, you need to detail who your target customers are and how they relate to or differ from the current franchise customer base. Luckily, most franchises offer assistance with this part of the process.

Check out our business planning hub to learn more about writing a franchise business plan .

5. Choose a suitable franchise location

Selecting a location can be complicated by specific requirements from the franchise owner. Size, setup, and even the atmosphere surrounding the business may limit your options.

Then, you must consider if the location makes sense from a performance standpoint. 

  • Is it going to attract your core customer base? 
  • Is there enough foot traffic?
  • Is your business easily accessible?

Hopefully, the franchisor will assist in this process. If not, check out our complete guide on selecting a business location for more specific steps.

6. Sign the franchise agreement and review the FDD

Before you sign a binding contract outlining mutual obligations between you and the franchisor—you need to review the Franchise Disclosure Document (FDD) document. 

The FDD contains a wealth of information, including:

  • The franchisor’s background: History, business experience, and any litigation or bankruptcy history.
  • Financial statements: Provides a clear picture of the franchisor’s financial health.
  • Initial and ongoing costs: Details about the initial franchise fee, training costs, grand opening costs, royalty fees, and other related expenses.
  • Training and assistance: Information on the training and support the franchisor will provide.
  • Franchisee obligations: What is expected of the franchisee in terms of purchasing equipment, maintaining standards, advertising, etc.
  • Territory: Whether the franchisee will have exclusive rights to a territory and the specifics of any territorial protection.
  • Trademarks: Information about the franchisor’s trademarks, copyrights, and proprietary information.
  • Renewal, termination, and transfer: The terms under which the franchise relationship can be renewed, terminated, or transferred.
  • List of current and former franchisees: Contact information for current franchisees and those who have left the system recently.
  • Earnings claims: If provided, details about the financial performance of existing units, though not all franchisors include this information.
  • Restrictions: Details on any restrictions on what can be sold, sourcing and supply, and territory.

Before signing the FDD, review it carefully, preferably with the help of a lawyer . 

7. Make your business legal

Aside from the franchise agreement and FDD, additional legal requirements exist to start your franchise.

  • Set up a business structure: The franchisor may specify which business structure you must use.
  • Federal and state registrations: At a minimum, you must apply for federal and state tax IDs. However, there may be additional requirements depending on your location.
  • Business licenses & permits: Depending on the location and nature of the franchise, various local, state, or federal licenses and permits may be required.
  • Tax registrations: Franchisees must register for appropriate federal, state, and local tax identification numbers and comply with tax obligations.
  • Insurance requirements: Franchisees often need various insurance coverages, such as liability, property, workers’ compensation, and more, as mandated by law or the franchisor.

8. Stay updated on franchisor policies

Most franchisors provide training programs for new franchisees that cover everything from business operations to customer service.

However, this initial training may not cover everything, and franchisors may update their policies, marketing strategies, or product offerings. 

Staying aligned with these changes ensures brand consistency and can impact the franchise’s success.

Dig deeper:

Should you open a franchise or start a business?

If you’re reading this, you’re likely more interested in opening a franchise than starting a new business. To be sure of your decision, let’s weigh the pros and cons of both options.

Things to consider when comparing franchise opportunities

Choosing the right franchise can be as challenging as developing a good business idea. Simplify the process and use these seven factors to help vet and select the right franchise.

History of franchising

Become familiar with how franchising has evolved into the business model it is today.

  • Common types of franchises

Franchising spans a wide range of industries. While there are countless specific franchise concepts—you can group them into several common categories:

Food and beverage 

Establishments that prepare and serve meals and drinks, ranging from quick-service to full-service dining.

  • Fast-food restaurants (e.g., McDonald’s, Subway)
  • Sit-down restaurants (e.g., Applebee’s, IHOP)
  • Coffee shops (e.g., Dunkin’ Donuts)
  • Ice cream and dessert parlors (e.g., Baskin-Robbins, Dairy Queen)

Businesses that sell goods directly to consumers from physical locations offering a variety of tangible products.

  • Convenience stores (e.g., 7-Eleven)
  • Specialty stores (e.g., The UPS Store, GNC)

Franchises providing specialized services to individuals or businesses—emphasizing expertise or personalized care.

  • Home services (e.g., Molly Maid, Mr. Handyman)
  • Automotive services (e.g., Jiffy Lube, Midas)
  • Health and fitness centers (e.g., Anytime Fitness, Gold’s Gym)
  • Educational services (e.g., Kumon, Sylvan Learning)

Business-to-Business (B2B)

Franchises that cater to other businesses, offering services that enhance business operations or efficiency.

  • Printing and promotional services (e.g., Minuteman Press, FastSigns)
  • Professional consulting and coaching (e.g., ActionCOACH)
  • Commercial cleaning (e.g., Jan-Pro, Coverall)

Real estate

Operate in the property market, assisting in buying, selling, or leasing properties, with a focus on market expertise.

  • Coldwell Banker

Franchises that provide accommodations for travelers, including hotels and motels, emphasizing comfort and amenities.

  • Hilton Hotels
  • Marriott International
  • Holiday Inn

Personal care

Focus on enhancing appearance and well-being, offering services like grooming, beauty treatments, and wellness.

  • Hair salons (e.g., Great Clips, Supercuts)
  • Spas and beauty treatments (e.g., Massage Envy)

Centered around leisure and entertainment, providing venues or services for relaxation and fitness.

  • Children’s entertainment centers (e.g., Chuck E. Cheese’s)
  • Fitness and recreational sports centers (e.g., Planet Fitness, Club Pilates)

Cater to niche markets or unique services not covered in other categories, such as specific demographics or specialized needs.

  • Pet services (e.g., Petland, Dogtopia)
  • Restoration and disaster recovery services (e.g., SERVPRO)
  • What franchise should you choose?

It can be quite challenging to choose a franchise since there are over 3,000 different concepts available. 

How do you narrow it down to one? Here are three tips:

1. Figure out what you’re good at

While you’re not coming up with a business idea , you can still use the same tactics to identify a winning franchise opportunity. The easiest place to start is by identifying and listing out your skills, strengths, and passions.

Maybe you’re a relationship-builder, an operations expert, or already have experience working with a franchise. 

If you’re struggling to identify what you’re good at, consider conducting a SWOT analysis on yourself. This will give you a structured way to assess your strengths, weaknesses, opportunities, and threats.

2. Match your skills to franchise opportunities

Use your skills as a reference when exploring franchise opportunities. Remember, you must be a good match for the franchise owner. 

Having industry-specific experience or skills can help sell them on your ability to run their specific type of business.

For instance, if you’re drawn to a commercial cleaning franchise because it’s B2B and aligns with your sales skills. 

3. Keep an eye on market trends

Be vigilant about consumer and business trends to ensure your franchise choice is relevant.

Take note of popular opportunities, but don’t jump on them immediately. Do your due diligence and determine if the franchise trend is sustainable and not a fleeting fad.

As always, fall back on market research to understand consumer spending habits. If the franchise category you’re interested in shows customers straying away from known brands—it may not be the right time to jump in. 

  • Start your franchise

Cooking up a brand new business idea has its value, but there’s no reason you can’t piggyback on a time-tested method and reap the benefits—as many franchisees are already doing today. 

If you’re interested in buying a franchise to start or run your own business, learn all you can before you buy.

With planning and thoughtful execution, a franchise business can be just as rewarding as any other startup.

Check out our complete guide on starting a business to ensure you’re prepared to open a successful franchise.

Clarify your ideas and understand how to start your business with LivePlan

Content Author: Kody Wirth

Kody Wirth is a content writer and SEO specialist for Palo Alto Software—the creator's of Bplans and LivePlan. He has 3+ years experience covering small business topics and runs a part-time content writing service in his spare time.

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business plans for a franchise

Developing a Business Plan for Your Franchise: When and How to Do it

business plans for a franchise

Creating a business plan is a critical step toward the launch of any new business, including a franchise. It’s a step to take earlier in the process than you may think. Will you be seeking financing from a third party? If so, your business plan should be complete before you even ask. And that’s a good thing, because the process of preparing a business plan is very useful. It forces you to anticipate and answer a number of questions about your expectations for the new business. You’ll identify the challenges ahead and be ready to tackle them.

Developing a business plan for a franchise is much easier than for an independent business start-up. You’ll have a good deal of information already at your fingertips or readily available. You can find much of the verbiage you’ll need for the narrative portions of the business plan within the franchisor’s documents. Look to any earnings representations in the franchisor’s disclosure documents to find the financial information you need.

5 Key Sections to Include in Any Business Plan

Each business plan is unique to the particular business it describes. Nonetheless, there are several sections common to any business plan. Franchise business plans will have an additional section outlining the track record, personnel, and support available from the franchise company. You can also include items like the franchise company’s sales brochure or Franchise Disclosure Document (FDD) as attachments to your business plan. This additional section will give lenders (and others you may be trying to impress) a great degree of confidence going forward.

Five key sections contained in a typical business plan, whether for a franchise or independent business, are:

Introduction

This section describes the business in detail. It specifies the product or service involved, the size and characteristics of the market, and the degree of competition present in the market. It also sets forth the operational approach for taking the business to market, as well as any associated challenges and risks.

This section lists key management roles for the new business. It names the people who will fill each role and provides background information about each one. Each bio should emphasize prior experience that’s relevant to the new business. For a franchise business, this section will also include information about the franchisor’s staff who provide support to franchisees.

This section defines the target market: who is your customer and how will you attract them to to the business? It explains advantages your business will offer over competitors and details marketing and advertising plans.

Pro Forma Financial Projections

This section includes projected income statements, cash flow statements, and balance sheets that show the anticipated financial performance of the business. It discloses all material assumptions that are used to prepare the projections. Make sure to prepare these projections on a very  conservative basis. There will always be delays and challenges that you can’t anticipate.

Financing Needs

Be sure to prepare this section even if all funding is coming from your savings. It includes a complete analysis of all start-up costs, including working capital to cover initial marketing plans and operating losses until the projected breakeven point. Even if you are not borrowing, the process of carefully detailing this information will better prepare you for whatever might happen as you get the business up and running.

Don’t be overwhelmed as you consider the information above. Remember, for a franchise business, most of this information will be readily available from the franchisor. Check out the franchise company’s website for information that will help you complete the Introduction and Marketing sections. The franchisor’s FDD will help you with the section on Financing Needs. And, if the franchisor’s FDD includes Item 19 earnings representations , you’ll be on your way to completing the Pro Forma Financial Projections section.

Preparing a Franchise Business Plan: The Early Bird Gets the Worm

Some franchise companies require franchisee candidates to begin work on (or substantially complete) their business plan before they can be approved as a new franchisee. Even if they have no such requirement, it’s a good idea to prepare your business plan relatively early on. The process will help you identify a number of questions that may not have otherwise occurred to you. You’ll then have a chance to contact the franchise company and get answers. Make certain you have a clear understanding of all aspects of the franchise prior to making your final decision.

Finally, remember to update and finalize your business plan after you complete the franchisor’s initial training for new franchisees. You will have a deeper understanding of operations, marketing plans, and many other aspects of the business after you complete the initial training. And many franchisors will supply pro forma financial models that you can use to double-check or even replace the financial projections in your business plan. Take the time to carefully review your entire business plan based on your new knowledge. That way, you’ll be fully prepared to get your new franchise business successfully up and running.

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How to Build a Comprehensive Franchise Business Plan

The franchising industry has never been as diverse and dynamic as it is today. Millennial business leaders have charged into the sector, bringing creativity and strategic integrity along for the ride. While 44% of franchisors are Baby Boomers, innovative business technology has reinvented the way we think about franchising. Automation has not only changed the way franchisors do business with end users, but also the way brands connect with and train their franchisees. E-commerce has leaked into the sector, bringing globalized trade with it. Multi-unit structures still dominate, but fresh approaches to business models are adding some zest to the cocktail. Customer relationship management (CRM) and logistics systems are increasingly being used to streamline everything from marketing to warehousing. In the new decade, every inch of business movement will be measured, analyzed, and streamlined, and that leads to one thing: profits. CRM will get your business moving from the first letter of your franchise business plan until your ultimate exit.

Building a Franchise Business Plan that Assures You of Success

The brave new world of franchising demands more from your business plan than ever before. It’s not easy to set up a franchising model scalable enough to cover international markets and digital demographics. Your franchising model must cater to local and national markets without ruling out global ones. It must trade in the brick and mortar space, yet develop thrust in the digital marketplace as well. Your growth strategy needs to build a detailed route into your future, and your model is the foundation that will keep your path from crumbling as the decades pass. When you take your successful business into the franchising sector, you need to create a completely new business unit and plan.

In essence, franchising is a pivot from selling a product to selling a business concept. Your success no longer ends with you. You can only be profitable if your franchisees are profitable, but your fees, commissions, and structure weigh heavily on your revenue, too. How will you break even? How will you assure your recruits of grand success? How will you ensure that your product and brand remain consistent across thousands of units? Your franchise business plan will answer these questions.

Executive Summary

Your executive summary is a brief overview of your plan that’s intended to captivate funders and lenders. Think of it as a cross between a miniature business plan and a pitch deck. It should outline a clear business strategy through both data and substance.

Franchise Introduction

Your franchise introduction is potentially the last thing your potential investors will read about your franchise, so it needs to be compelling. It’s typically a three-page management overview of your franchise covering your business goals, description, and justifications for franchising your business. Include your profit milestones, competitive differentiation, and geographical considerations. The rest of your franchise business plan will pull apart all of these numbers in greater depth.

Franchise Description

This is your opportunity to express your vision. Your description includes your formation data, founders, markets, and location. If you’re franchising an existing business, your description should also outline your current pre-franchised business’ achievements.

SWOT Analysis

A franchise business plan isn’t just a dedication to everyone who might invest in your vision. It’s also an opportunity to tighten your own intentions. Your SWOT analysis will serve you more than it does your funders, but it’s integral to your competitive edge. It should include your brand’s strengths, weaknesses, opportunities, and threats, both in terms of your brand and whether franchising offers its best chance of success. Your SWOT positions you in the market alongside your rivals, so it will tell you if you need to pivot or diversify yourself before you launch. The market research you collect will unveil the fundamental problems that could annihilate your dream. 

Product or Service Description

While the product your franchise sells matters, don’t neglect your new product: your franchise concept. Your product description should outline your development stage, pricing strategy, and any research and development you intend to do in the near future.

Marketing Plan

Business concepts can’t grow legs without a marketing strategy . Odds are excellent you’ll need to redraft your marketing approach entirely when you franchise an existing business, including key market and industry analysis for both your brand and franchise concept. Automation and machine learning can generate the data that will fuel this part of your franchise business plan. It might be tempting to start fantasizing about grand creative campaigns at this point, but flights of fancy will lack weight if they aren’t hooked into information. Even the most rudimentary research costs an average of $20,000 , but there are two cheaper and more effective solutions: automation and machine learning. An AI-based CRM will send your forecasting to new heights, helping you to draft consumer profiles to fuel your ultimate marketing strategy.

Royalty Fees

Your royalty fee structure determines how sustainable your franchise will be. It covers your running fees while providing one of your core regular income sources. Your choice of fixed or percentage rates can mean the difference between firecracker profits and a monthly slog, but set it too high and you risk chasing away recruits. CRM software will do the number crunching on your behalf, running as many simulations as you need to find a reliable structure.

A Financial Forecast

The quality of your financial projections will determine how seriously your investors will take you, so make it count. Your franchise business plan is nothing more than a concept until you flesh out the forecasted numbers. This is the psychic of your plan, and it doesn’t always bring good news. It might convince you not to go into business at all. The deeper you dive, the more accuracy you’ll gain. Your forecast will include profit and loss, balance, and cash flow sheets, but don’t let those terms trap you in an accounting mentality. It’s intended to tell you where you’re going, not where you’ve been, so your calculations will be quite different. A forward-looking view defines your first and last moments as a franchisor. As such, it helps you to create your exit plan.

Planning for Your Exit

As important as it is, many entrepreneurs don’t have an exit strategy . If your franchise agreement and roll-out plan are the hors dóevres of your franchise business plan, your exit strategy is the dessert. This is your opportunity to reap rewards, but it’s a part of your meal and needs to be planned for from the beginning. No matter how tempting it is to reach beyond the “buy, build, sell” mentality, every investment needs to be parted with. Building in a way that supports an impressive valuation has its own rewards, and they arrive in cold, hard profits. Franchisors sell their franchises for many reasons. Retirement, fresh opportunities, and simple profit drive are three of the most common, and they may ultimately push you into a sale. Even so, it’s unwise to swim out into a lake if you don’t know its length, otherwise you risk drowning.

If you’re ready to leap into a great business opportunity from the beginning, you’ll gain control of the resale process. A formal exit plan is best drafted with the guidance of an attorney or accountant who is qualified to juggle the taxation issues relating to your sale and transfer of ownership. Your strategy should include a primary exit goal detailing who you expect to sell to and when. You needn’t make an absolute exit. Many franchisors take on an advisory role instead. Finally, you’ll need to list the actions you need to take to achieve your exit valuation. 

Building Multiple Franchise Units Simultaneously

When Ray Kroc transformed McDonald’s from a neighborhood store into a global legend, he had a thousand dreams about taking the concept to the entire world, but one dream ruled them all: the desire to create a burger recipe that could be repeated customer after hungry customer without losing any quality. Once he’d struck beefy gold, his next dream was to do it repeatedly across franchises. To achieve that, he decided to start small. He built uniform systems to cover everything from his first unit’s administration to its management style and trademark. Only once he’d achieved that did he roll his business out to franchisees, and his slow, steady work was the reason for its resounding success. Today, it’s also the reason new franchisors use the Ray Kroc roll-out strategy.

Your initial roll-out of franchise units is, in many ways, the toughest educational experience you’ll ever face. Your learning curve will be more of a vertical line than a slope, and no amount of research will teach you all you’ll need to learn. This is something you must learn in practice, and there are a myriad ways to approach the challenge. One of the simplest is to avoid it entirely by building a single flagship unit before attempting a wider roll-out. This way, you can flatten the curve and pay closer attention to the tiny details that will one day characterize your brand. It will also allow you to recruit potential franchisees through a living business concept—and nothing is quite as convincing to recruits as legitimate sales figures and a queue of passionate customers.

A slow network roll-out lets you nurture your first recruits and solidify their success. When you aren’t juggling 20 units at once, you have the time to turn your franchise business plan into a living, breathing organism with its own marketing materials, logistics strategies, and on-boarding tactics. Each of your first franchises will need to be within driving distance to one another, but when you’re working with a new brand, your client base won’t be large enough to warrant a unit on every street corner. Slow market penetration should, however, lead to fast diffusion and adoption, but no strategy is completely airtight. You’ll experience lower profit margins initially but will be less likely to shoot holes in your brand identity.

Synuma can increase your diffusion rates and ramp up your profit margins by automating the rollout process. Why do it the Ray Kroc way when you can enjoy all the benefits without the drawbacks? This intelligent software will improve your decision making and let you shrug off many of your responsibilities by handling repeatable tasks in a standardized way. It will support your initial franchisees and offer you a more hands-free management process.The Development and Operations Modules won’t require you to develop your own systems, but membership gives you access to potent development tools that will support your roll-out where it counts for you. This is, after all, a unique brand that should be guided by your own values and priorities. Nobody ever achieved grand dreams by fitting inside someone else’s cookie cutter. Your roll-out plans will be very different if you’ll be relying on CRM software, so bear it in mind when you write your franchise business plan.

Lead Qualification

Franchising is one of the best growth strategies in the business world, but it’s not fail-proof. Living on the cusp of your own growth curve requires a powerful lead qualification strategy that will identify the recruits who will serve your brand profitably. One bad choice and you can send your business into a PR crisis that travels halfway across the world in a day’s worth of social media posts. Every unit you open requires a considerable investment of time and money, but reps consider lead qualification to be their greatest challenge . CRM software has become innovative enough to tell you which leads are engaged, which are merely curious, and which fit your target market like a second skin. The days when you had to qualify your leads over the phone are over. Machine learning and automation will handle the process while you’re on the road to meet your first franchisee—no independent research necessary. CRM technology generates an average return of $8.71 per $1 spent : a growth rate that increases exponentially when you’re selling franchises rather than products. Factor it into your franchise business plan, and you’ll draw a far more compelling picture for your investors and potential recruits.

Avoiding Fraudulent Business Practices

In 2018, several franchisees took their Vision Express franchise to court for coercion. The claimants felt they had been pushed into signing their franchise agreements—a claim the court found to be credible. The case highlighted the fact that not all contractual exclusions are enforceable. The franchise sector marches in lock-step to a huge array of regulatory confusion, and both franchisors and franchisees must overcome it. Drafting a tight franchise agreement is no solution. Fairness and truth must prevail. Vision Express misrepresented their franchise in three areas :

The likely profits of each store

The ratio of eye tests and glasses sales

The overdraft repayment period

Ignorance is no excuse for misrepresentation, so the drafting of your agreement is one of the most complex tasks you’ll ever complete. In short, your projections, metrics, and other calculations need to be on point from your very first franchise business plan. Any sales process is weighted with risk, but franchising is particularly challenging. You can mitigate your risk through liability exclusions and boilerplate limitations, but inaccurate numbers will leave you floating out in space with no gravity to hold you down.

Not all sales fraud occurs after the point of purchase. Misrepresentation can sneak into the recruiting process as well. All in all, your FDD must cover several core facets under federal law. They are:

Background data about you as a franchisor

History of litigation

Clients and territories

Ongoing costs

Financial statements

Initial and long-term costs

Transparency and honesty are more than mere values. They’re required by law, but cost estimates are difficult to build if you’ve yet to open your first few units. This is where AI and machine learning come in. They can help you to flesh out the bare bones of your future in a transparent and reliable way.

Most businesses wait six years before rolling out their first franchise unit, but with the power of AI and automation, you can leap ahead of your own curve and tweak its growth to your own strategy. Once you’ve perfected your first roll-outs, machine learning will nudge it towards success one improvement at a time. Every franchise launch will be a learning process that makes the next launch smarter and more profitable thanks to data collection and analytics.

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The 7 Key Elements Of An Effective Franchise Business Plan

  • Adam Goldman
  • May 12, 2020

Franchise Business Plan | Franchise Coach

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.

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 . 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. Franchise Business Plan: 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. Franchise Business Plan: 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,
  • 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 . Franchise Business Plan: Competitive Analysis

Franchise Business Plan (Competitive Analysis) | FranchiseCoach

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 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.

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. Franchise Business Plan: 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

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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. Franchise Business Plan: 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 franchise 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.

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, talk to a franchise consultant .

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Franchise Business Plan

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You’ve finally decided to own a franchise business. Excellent. Entering a marketplace full of competitors and big industry names might seem overwhelming. However, a well-crafted business plan can provide a roadmap to success.

Are you looking to start writing a business plan for your franchise business? Creating a business plan is essential to starting, growing, and securing funding for your business. So we have prepared a franchise business plan template to help you start writing yours.

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Download our free business plan template now and pave the way to success. Let’s turn your vision into an actionable strategy!

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How to Write a Franchise Business plan?

Writing a franchise business plan is a crucial step toward the success of your business. Here are the key steps to consider when writing a business plan:

1. Executive Summary

An executive summary is the first section of the business plan intended to provide an overview of the whole business plan. Generally, it is written after the entire business plan is ready. Here are some components to add to your summary:

Start with a brief introduction:

Market opportunity:, mention your product or services:, management team:, financial highlights:, call to action:.

Ensure you keep your executive summary concise and clear, use simple language, and avoid jargon.

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2. Business Overview

Depending on your business’s details, you’ll need different elements in your business overview. Still, there are some foundational elements like business name, legal structure, location, history, and mission statement that every business overview should include:

About the business:

Provide all the basic information about your business in this section like:

Product distribution franchise

Management franchise, business format franchise.

  • Company structure of your business , whether it is a sole proprietorship, partnership or something else.
  • Location of your business and why you selected that place.

Mission statement:

Business history:, future goals:.

This section should provide an in-depth understanding of your business. Also, the business overview section should be engaging and precise.

3. Market Analysis

Market analysis provides a clear understanding of the market your business will run along with the target market, competitors, and growth opportunities. Your market analysis should contain the following essential components:

Target market:

Market size and growth potential:, competitive analysis:, market trends:, regulatory environment:.

Some additional tips for writing the market analysis section of your business plan:

  • Use various sources to gather data, including industry reports, market research studies, and surveys.
  • Be specific and provide detailed information wherever possible.
  • Include charts and graphs to help illustrate your key points.
  • Keep your target audience in mind while writing the business plan.

4. Products And Services

The product and services section of a franchise business plan should describe the specific services and products that will be offered to customers. To write this section should include the following:

List the services:

  • Create a list of the products or services your franchisee will offer. For example, if you own a fast-food franchise, you may include a menu description, pricing strategy, and specific services like takeaway, home delivery, drive-through facility, etc.
  • Describe each service: Provide a detailed description of what it entails, the time required, and the qualifications of the professionals who will provide it. For example, a Visual Merchandiser is responsible for creating attractive and effective displays in a clothing franchisee.

Emphasize safety and quality:

Overall, a business plan’s product and services section should be detailed, informative, and customer-focused. By providing a clear and compelling description of your offerings, you can help readers understand the value of your business.

5. Sales And Marketing Strategies

Writing the sales and marketing strategies section means a list of strategies you will use to attract and retain your clients. Here are some key elements to include in your sales & marketing plan:

Develop your unique selling proposition (USP):

Marketing strategies:, sales strategies:, customer retention:.

Overall, your business plan’s sales and marketing strategies section should outline your plans to attract and retain customers and generate revenue. Be specific, realistic, and data-driven in your approach, and be prepared to adjust your strategies based on feedback and results.

6. Operations Plan

When writing the operations plan section, it’s important to consider the various aspects of your business processes and procedures involved in operating a business. Here are the components to include in an operations plan:

Hiring plan:

Operational process:.

  • For example, McDonald’s has strict SOPs covering everything, including strict procedures for cooking, assembling, and packaging food, handling customers, and maintaining a clean environment.

Equipment & Technology:

By including these key elements in your operations plan section, you can create a comprehensive plan that outlines how you will run your business.

7. Management Team

The management team section provides an overview of the individuals responsible for running the operations. This section should provide a detailed description of the experience and qualifications of each manager, as well as their responsibilities and roles.

Key managers:

Organizational structure:, compensation plan:, board of advisors:.

Describe your franchisee’s key personnel and highlight why your business has the fittest team.

8. Financial Plan

When writing the financial plan section of a business plan, it’s important to provide a comprehensive overview of your financial projections for the first few years of your business.

Profit & loss statement:

Cash flow statement:, balance sheet:, break-even point:, financing needs:.

Remember to be realistic with your financial projections and provide supporting evidence for your estimates.

9. Appendix

When writing the appendix section, you should include any additional information that supports the main content of your plan. This may include financial statements, market research data, legal documents, and other relevant information.

  • Include a table of contents for the appendix section to make it easy for readers to find specific information.
  • Include financial statements such as income statements, balance sheets, and cash flow statements. These should be up-to-date and show your financial projections for at least the first three years of your business.
  • Provide market research data, such as statistics on the size of the industry, consumer demographics, and trends in the industry.
  • Include any legal documents such as permits, licenses, and contracts.
  • Provide any additional documentation related to your business plans, such as marketing materials, product brochures, and operational procedures.
  • Use clear headings and labels for each section of the appendix so that readers can easily find the information they need.

Remember, the appendix section of your franchise business should only include relevant and essential information supporting your plan’s main content.

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This franchise business plan sample will provide an idea for writing a successful franchise plan, including all the essential components of your business.

After this, if you still need clarification about writing an investment-ready franchise business plan to impress your audience, download our franchise business plan pdf .

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Decide Effective Business Location for Business

Decide Effective Business Location for Business

Pricing Strategies to Attract Customers

Pricing Strategies to Attract Customers

Frequently asked questions, why do you need a franchise business plan.

A business plan is an essential tool for anyone looking to start or run a successful franchise company. It helps to get clarity in your business, secures funding, and identifies potential challenges while starting and growing your franchise business.

Overall, a well-written plan can help you make informed decisions, which can contribute to the long-term success of your franchise business.

How to get funding for your franchise business?

There are several ways to get funding for your franchise business, but one of the most efficient and speedy funding options is self-funding. Other options for funding are:

  • Bank loan – You may apply for a loan in government or private banks.
  • Small Business Administration (SBA) loan – SBA loans and schemes are available at affordable interest rates, so check the eligibility criteria before applying for it.
  • Angel investors – Getting funds from angel investors is one of the most sought options for startups.
  • Small business grants – there are small business grants available, check for the same in your location and you can apply for it.

Where to find business plan writers for your franchise business?

There are many business plan writers available, but no one knows your business and idea better than you, so we recommend you write your franchise business plan and outline your vision as you have in your mind.

What is the easiest way to write your franchise business plan?

A lot of research is necessary for writing a business plan, but you can write your plan most efficiently with the help of any franchise business plan example and edit it as per your need. You can also quickly finish your plan in just a few hours or less with the help of our business plan software.

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Franchising Strategy: Strategic Business Plan Development

Aug 27, 2021 | How to start a franchise

Franchising Strategy: Strategic Business Plan Development

Thriving franchises tend to share some aspects, including well-designed franchising strategies and business plans. Get more information on how to develop your own Strategic Business Plan , and find out how to lay the foundation for a potential franchise.

Find out how “one size fits all” can be a recipe for disaster for possible franchisors, and discover the techniques for ensuring that you build a solid franchise with the needed structure to help them attract customers and grow.

This look at business plans and strategies for franchises help to give you the tools to possibly start your own franchise conversion process.

All too often, inadequate planning and development of a franchise business structure before offering franchises is reason why newcomers to franchising will fail.

The importance of a Strategic Business Plan

Sometimes, they will just ask their lawyer for input.  But while good franchise lawyers are invaluable when it comes to legal issues, they are unlikely to have the business experience, education, or expertise to develop sophisticated cash flow models and the organizational development plans that should accompany them.  Instead, they must provide their input based on “what they have seen” in the marketplace.  In fact, many franchisors will make the mistake of simply copying the franchise structure of their competitors when entering into the complex world of franchising.  The rationale is that “if it worked for them, it should work for me.”

The problems with this approach are threefold.

First , this approach assumes that the new franchisor’s franchise offering should be similar to the offerings of their competitors.  Unfortunately, “me too” is not a strategy.  Often, it is a recipe for disaster.  A new franchisor must distinguish itself from their competitors in order to attract a franchise buyer who has a choice between them and their more established rival.  This difference can come in the form of the consumer offer, franchise marketing, franchisee support and training, or franchise structure.  And all of these will have implications for the way in which the franchise offer is crafted.

Second,  this approach assumes that even if a similar strategy is implemented, that the resources of both organizations are similar.  Every organization comes to franchising from a different starting point – with different strengths and weaknesses.  Competing with an established franchisor by going head-to-head in an area of their strengths can be a huge mistake.

Third,  this approach assumes that a new franchisor’s competitors did it right in the first place.  What if they simply made decisions at random?  Often, it may take years for a franchisor to realize that an early decision is resulting in diminished profitability.

A mistake of a  single percentage point on a franchise royalty can easily cost you millions of dollars.   How?

Consider the following example:

A franchisor expects that the average unit revenues of their prospective franchisees will be $500,000 and hopes to sell 100 franchises in the first year.  But instead of charging a 6% royalty, they opted for 5%.

It does not seem like a big mistake, when accounting for a single franchisee.  It simply means that the franchisor will make $5,000 less in royalty revenues.  But in franchising, we are talking about growth on steroids, and this mistake might be multiplied 100 times or more.  And, since there are no expenses associated with this $5,000, this mistake comes right off the bottom line.

So do the math:

And an incorrect royalty is only one of a number of different business decisions that a new franchisor will make early in the process that could impact long-term profitability.  Just a few of the many others include:

  • Advertising fees
  • Technology fees
  • Product margins
  • Type of franchise offered (individual, area development, area representative, etc.)
  • Organizational structure
  • Compensation structure
  • Geographic growth strategy
  • Territorial rights provided to franchisees
  • Reservations of rights for the franchisor

In order to best position new franchisors for success, the iFranchise Group will often take a six-step approach to the development of your franchising strategy and business plan:

  • Initial discovery – we immerse ourselves in your business and organizational structure to better understand how you should position the concept.
  • Competitive benchmarking – we then gain a detailed understanding of the business decisions made by your competitors, understand competitive strengths and weaknesses, and how to best position the concept against them.
  • Organizational gap analysis – we gain an understanding of your internal capabilities, your needs to fill certain “gaps” when delivering services to your franchisees, and the resources you can call on to do so, in order to plan your organizational development.
  • Initial strategy development – we use your goals and your unique strengths and weaknesses to develop a preliminary franchise structure, subject to further financial analysis.
  • Financial modeling – we then develop a complex cash flow model (often 16 pages or more) that allows us to test various business decisions for both the franchisee and the franchisor simultaneously.
  • Financial sensitivity analysis – we then test various alternative scenarios to determine the impact that each might have on both the franchisee and the franchisor before making the recommendations that will allow you to finalize your business decisions.

By following the steps outlined above, the business structure and franchising strategy that we ultimately recommend for our clients is based not only on best-practices in franchising and within the client’s industry, but also on a close examination of our client’s culture, goals, business economics, and the resources available to implement a franchise program.

To learn more about how this franchising strategy and business planning process can help provide you with your best chance of success in franchising,  contact us . Email us at  [email protected] , or call one of our consultants at  708-957-2300.   And be sure to  request our free video on How to Franchise Your Business  – which will go into greater detail on this important topic.

About The Author

Franchise Word Team

Franchise Word Team

Is a seasoned franchise consultant and business strategist with a knack for uncovering lucrative franchise opportunities. With a rich network within the franchising community and a keen eye on market trends. We are trusted guide for entrepreneurs seeking top franchise opportunities. Providing timely updates on trends across various sectors including restaurants, fitness, retail, healthcare, and more. Franchise Word aims to help you make informed, profitable decisions in the evolving world of franchising.

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How to Write a Business Plan for Your Franchise

  • September 2, 2022
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Katie Fleming

Katie Fleming

Co-founder and COO of Owner Actions

A person uses a laptop computer to write a business plan for running a franchise.

  • Disclosure: Owner Actions may be compensated for sales made through this article. Learn more.

When you apply for an SBA loan , a term loan , or another form of financing, you may need to present the lender with a business plan for your franchise. This plan will describe your business’s purpose and potential and explain how the capital you’re seeking can help it attain its goals.

Why is a business plan for a franchise important to lenders?

Lenders want to see that you have a viable idea and a sustainable plan worth funding. They also want to evaluate whether you have the means to bring your business plan for your franchise to fruition.

When compiled correctly, your business plan will help lenders learn about your business’s financial capacity, the competitive challenges it’s up against, the members of your team who can help you realize your vision, and other important details that can contribute to its success. These elements will help them make assessments about the business’s strength and the likelihood you’ll be able to repay any capital they provide.

What should my plan include?

Your plan should include the following elements:

How can I make my plan look professional?

Here are some tips:

  • Use a professional font, like Times New Roman or Calibri, that’s easy to read on- and off-screen.
  • Use a bold, slightly larger font for headings and subheadings that’ll help lenders find content quickly and easily as they review your document.
  • Create easy-to-read charts that’ll help the lender understand your projections and forecasts.
  • Use chart and text colors that are pleasing on- and off-screen.
  • Embed color graphics of the facility, team, product, and parts of your processes into the appropriate sections of your plan.
  • Ensure that your business’s name and contact information are included on every page of the document. You can insert this information into the document’s header and set it to appear on every page except the cover sheet .
  • Run a spelling and grammar check on the document.
  • Update the table of contents after finalizing every other change.

Before you submit the plan, you should print a hard copy and review it for typos and formatting issues. Once the document is ready, you can print it to a PDF file and submit it to your lender.

Can you help me write my business plan?

Yes! With our newest service, we can structure, draft, and polish your business plan. You can learn more about this done-for-you service here .

Looking for a DIY option? Try a service like LivePlan , which can help you pitch, plan, and track the success of your business plan. Many owners use this service to browse more than 500 sample plans, organize their ideas, build robust financial projections, and access professional guidance through the planning process.

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Want a pro to look it over when you’re finished? We’re happy to consult and provide the expert feedback you need. Check out how we can help here .

Projectionhub is another great service that can help you take on the projection piece of your plan. This service offers 50+ industry-specific templates expertly prepared by a CPA for as little as $49. For a limited time, you can save up to 15% on this service with the code OWNERACTIONS (some restrictions apply; contact Projectionhub for details).

What’s next?

Securing financing is a major milestone in the acquisition process. After you write your business plan for a franchise, you’ll work through other tasks that’ll help you prepare for operations. Log into your owner’s portal for articles, checklists, and advice on finding a location, hiring your employees, preparing for opening day, and more.

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How to start a franchise

12 steps to franchising a business..

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In this guide

How to start a franchise business

How to buy a franchise with no money, buying a franchise vs. starting a business, bottom line, frequently asked questions.

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Business formation

Opening a franchise allows you to flex your entrepreneurial skills without starting from scratch. You get a proven business model while still being your own boss. However, the startup fees can be pricey, and you must sign a contract committing to the franchisor’s playbook.

Starting a franchise can take three to four months from your initial research to the final purchase, according to the Small Business Administration (SBA) (1) .1 After you’ve signed the contract, it could take another two to six months until you’re ready to welcome customers.

That said, running your own franchise can be rewarding — and lucrative. These 12 steps can help guide you from conception to opening day.

1. List your top companies or businesses

When putting together a list of franchises you’d like to own, start by thinking about your favorite businesses. Consider your strengths, weaknesses and passions against what you think could make you money.

Franchises are available in nearly every industry:

  • Business services
  • Convenience stores
  • Real estate
  • Educational and learning
  • Entertainment
  • Specialty retailers
  • Travel agents
  • Health and fitness
  • Home healthcare

2. Research the franchise market

You can gather information about market conditions in your area, including demand and predictions for economic growth, through the SBA, the Census Bureau and private market firms to help you choose which franchise to open.

Take advantage of the resources at your local Small Business Development Center or a business school at a nearby college or university.

People who already own franchises can be invaluable resources. Ask about their experience and whether the process was worth it.

3. Evaluate investment and franchise costs

After you’ve pinpointed a market, research and compare the costs associated with your top picks. Franchise costs vary widely depending on the industry and business you choose to invest in, not to mention where you live or plan to do business. (2)

Note that some franchise owners — called franchisors — require a minimum net worth for franchisees.

When calculating the cost of starting your chosen franchise, look beyond upfront fees to costs that come with everyday business ownership.

4. Request a franchise disclosure statement

Reach out to the franchisor for a copy of its franchise disclosure document (FDD), which contains detailed legal information about its franchise group, along with financial data like the average gross revenue of its locations.

Sometimes you can find FDDs available for free from online databases around the web. Just make sure you obtain the most recent version, as franchisors release a new FDD every year.

Also, consider the retention rates for your chosen franchise. A retention rate is the percentage of locations that close each year. Section 20 of the FDD breaks down closures by state, so you can see how many have closed in your area compared to those in operation.

What else can I find in the franchise disclosure document?

An FDD covers more than 20 elements of buying a franchise, such as fee requirements, estimated initial investments and performance and revenue details.

It’s the legal information a franchisor is required to disclose to you, the franchisee, as part of due diligence before you invest.

The franchisor must provide you with the FDD at least 14 days before you sign a contract, though it’s a good idea to request a copy for your initial research. You can typically download a PDF of the FDD, though some franchisors might send you a hard copy.

5. Consider forming an LLC or corporation

Purchasing a franchise as a limited liability company (LLC) or corporation, rather than as a sole proprietor , provides financial and legal protection of your personal assets.

As an LLC or corporation, you aren’t held personally accountable for debt incurred by the franchise. If you remain a sole proprietor, you’re legally indistinguishable from your business — so you must cover business debt out of pocket, if necessary.

The same goes for lawsuits. As an LLC or corporation, your personal assets are covered if someone decides to sue your franchise.

6. Write a comprehensive business plan

A good business plan can help you analyze costs, predict sales and estimate profits before signing an agreement. Research what to expect in the months and years ahead to gather the information you need to take the next step — or pause if you’re not ready.

A successful business plan typically includes eight key components:

  • Executive summary
  • Company description
  • Market research
  • Organization structure
  • Product research
  • Financial analysis and funding needs
  • Financial projections

A business plan is necessary if you plan to apply for funding. Lenders want to see a viable plan for turning a profit and sustaining your business over the long haul, as it helps them evaluate if you’ll repay.

7. Get the financing you need.

If you don’t have the initial investment costs at the ready, you may need outside financing to launch or run your franchise. Many banks, the SBA and franchise-specific lenders offer financial help for would-be franchisees.

Other options include crowdfunding or lenders based entirely online. Online lenders like Kiva and Bluevine tend to leverage technology for more streamlined or automated approval processes. You could also use an online business marketplace like Lendio or Fundera to compare a network of funding options in one spot.

Some franchisors, like the UPS Store, Chem-Dry Carpet Cleaning and Cruise Planners, offer financing assistance, either through in-house programs or partnerships with third-party lenders. For example, Cruise Planners finances 50% of your franchise costs over the first 12 months, while Chem-Dry offers in-house financing for the initial licensing fee. This information is available in section 10 of the FDD.

8. Apply for the franchise and an interview

How you apply depends on the franchise you choose. For example, McDonald’s allows you to fill out an application online, while Chick-fil-A requires an expression of interest form to get the ball rolling.

Plan to attend interviews with the company, which allows time to parse through important details and determine if you’re a match for the franchise.

Expect questions that cover your plans, experience, finances and support, including your:

  • Goals, timeline and territory
  • Previous franchise and industry experience
  • Reasons for choosing the industry and franchise
  • Personal support system
  • Financial capital and business plan
  • Leadership experience
  • An exit strategy

9. Review and sign the franchise contract or agreement

If after your interview you and the franchisor decide it’s a good match, it’s time for the paperwork. You’re required to complete a franchise contract, which is a binding legal document that details:

  • Location and territory
  • Equipment and operations
  • Royalties and ongoing fees
  • Advertising and marketing
  • Trademarks, patents and signage
  • Training and ongoing support
  • Quality control and insurance
  • Dispute resolution
  • Renewal rights
  • Termination and cancellation policies
  • Exit strategies

Franchise contracts come with terms of five to 20 years. At the term’s end, you can often choose whether to renew the contract or discontinue your franchise.

At contract signing, you’ll likely need to also pay any upfront fees or initial investment expenses. Talk with the franchisor about preferred payment methods so you’re prepared.

10. Comply with state and local permit requirements

Most state and local governments require you to obtain licenses before launching your franchise — including health permits, occupational licenses, tax registrations and business licenses — or face fees.

While most states require the franchisor to apply for business licensing, a handful of states require a franchisee to register:

  • Connecticut
  • North Dakota
  • Rhode Island

You may also need to register for a license on a county or city level. Your franchisor should be able to help you anticipate permits required for your area and navigate the legal requirements. The SBA also provides information about franchise licenses that depend on your industry and state.

11. Build your location and assemble your team

The franchisor provides you with the essential elements of preparing your space — like signage, blueprints, fixtures and general decor — but you’re in charge of hiring contractors for the construction work.

You’re also responsible for hiring and training employees . Most franchisors provide training resources for franchisees, even sending a representative to help bring everyone up to speed about company branding, culture and expectations.

12. Stage a grand opening

In the days and weeks leading up to opening day, generate an awareness of your brand within the surrounding community. Most franchisors provide a marketing game plan and might even send a corporate team to help with your grand opening.

When preparing for your big day, a few tips can help make it a success:

  • Choose a date with high traffic to attract as many people as possible.
  • Send press releases to local media and advertise to your market.
  • Invite friends, family and city officials.
  • Decorate the store to attract attention and generate a festive feeling.
  • Organize exciting activities on opening day, like door prizes or giveaways.

If you’re short on cash, you aren’t disqualified from starting a franchise — but you’re going to need to explore funding and financing to get from planning to opening day.

  • Small business loan . Available amounts for small business loans range from $5,000 to $5 million, and rates start at around 5%.
  • Personal loan for business . A personal loan typically comes with fewer requirements. However, they often max out at $50,000, and expect rates from 4% to 36%.
  • SBA loan . Loans from the Small Business Administration (SBA) are known for low interest rates, but strict requirements and a lengthy application.
  • Home equity loan or HELOC . Consider borrowing against the equity in your home as a home equity loan or line of credit . But, because your financing is tied to your home, you risk losing your property.
  • Rollovers for business startups . A rollover for business startups — or ROBS — allows you to invest retirement funds into your business without paying taxes, fees or interest. However, this puts your retirement at risk.
  • Business partnership . Partners can assume part of the financial risk if you can’t fund the business alone. However, while you split the funding, you also split the profit.

When deciding between buying a franchise and starting your own business from scratch, a major difference is the initial investment compared to the ongoing fees. Buying a franchise usually costs more upfront, while the expense of starting your own business varies widely but is typically cheaper in the beginning. (3)

How important is autonomy to you? With a franchise, you’re buying into an existing business with limited control, as you’ll need to follow strict branding, marketing and legal guidelines. Starting your own business, on the other hand, offers more creative freedom. But, that comes with the challenge of building a customer base from nothing.

Overall, buying a franchise means you’re part of a proven system with more restrictions, but also with the benefit of brand recognition and corporate support. A new business means you’re building everything from the ground up, with more risk but also more freedom.

Case study : Opening a Critter Control franchise

Let’s say you want to open a Critter Control franchise in San Jose, California — a city with a population of about 1 million people. At an average of $582,828 gross revenue for that market, according to Critter Control, here’s what you could reasonably expect.

To estimate your profits in the first year of opening, you’d subtract the franchise fee, initial investment, operating costs and royalties from the average gross revenue.

Average gross revenue – (franchise fee + estimated initial investment) – operating costs – royalties

= First-year profit

$582,828 – ($70,100 + $116,550) – $326,384 – $46,626

Using this equation, you can expect to pocket about $23,168 after your first year in business. Because the franchise fee and initial investment are one-time fees, you should be able to make more money in the following year — some $209,818, assuming your average gross revenue stays about the same. As the business grows — and your gross sales increase — your profit is expected to increase over time, barring unforeseen circumstances in the market and industry.

Starting a franchise might be the right choice if you’ve got a solid game plan for raising funds and like the idea of following a tried-and-true business model. But if you’re still on the fence or want to research other options, browse our small business guides to starting, buying or growing a business.

How much money do you need to start a franchise?

The cost of buying a franchise depends on various factors, such as the location and industry. A restaurant in New York will cost significantly more than one in a small town — even just for the real estate alone. Startup costs can range from $10,000 to $5 million, with the average falling between $100,000 and $300,000, according to APD.2

How profitable is owning a franchise?

The profitability of a franchise varies significantly based on the brand’s strength, industry, startup costs and other factors. Data from 2017 shows that for food and beverage franchises, the median annual income is around $70,000 for two years or more in business and around $50,000 for startups. Only 34 percent earned more than $100,000, while many earned much less, according to a survey by the Franchise Business Review.3

How do franchise owners get paid?

Franchise owners and franchisors profit from the business’ success. Franchisors earn income through the royalties and fees paid by their franchisees, while franchise owners generate income from the net profits of sales and services, which is the remaining revenue after deducting overhead expenses. These overhead expenses include the cost of equipment, inventory, staffing and maintenance of a physical location, including utilities like electricity and internet.

  • “How long does it take to start a franchise?,” US Small Business Administration, September 6, 2018
  • “Franchise startup costs,” ADP
  • “How much do franchise owners make and is it profitable?,” Franchise Business Review, October 6, 2018

business plans for a franchise

Holly Jennings

Holly Jennings is an editor and updates writer at Finder, working with writers across all niches to deliver quality content to readers. She’s edited hundreds of financial articles ranging from credit cards to investments. With empathy at heart, she especially enjoys content that breaks down complex financial situations into easy-to-understand information. Prior to her role at Finder, she collaborated with dozens of small businesses to maximize the reach and impact of their blog posts, website copy and other content. In her spare time, she is an award-winning author for Penguin Random House, writing about virtual reality worlds, magical girls and lasers that go pew-pew.

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JUST RELEASED: View the 2024 Franchise 500 Ranking

Which Franchise Model Is Right for You? Here's How to Choose There are thousands of brands and concepts, but franchises generally fall under two business models: "brick-and-mortar" and "service-based." Which is the best choice for you?

By David Busker • Feb 13, 2024

Opinions expressed by Entrepreneur contributors are their own.

A major decision potential business owners must make when considering a franchise is determining what type of business they should run. There are thousands of brands and concepts, but franchises generally fall under two business models: "brick-and-mortar" and " service-based ."

Think about a franchise you know. Any franchise. Possibly one that offers services that you use consistently. Is it a hair salon? A fitness studio? A lawn care company? Maybe a moving service?

All of these are franchises, but in terms of a business model, the hair salon and fitness studio fall under one umbrella — location-based businesses with retail storefronts where the customer receives the service at a fixed-base location. Meanwhile, the lawn care company and moving service fall under another umbrella — service-based brands — which do not have a storefront or customer-facing real estate and the service is provided at the customer's location.

Here are some of the key differences between brick-and-mortar and service-based businesses, as well as the criteria to build one, so you are more informed when choosing a franchise model.

Related: 7 Essential Questions to Ask Yourself Before Starting a Franchise

1. Investment cost

Real estate is what usually drives franchising investment costs . The more real estate intensive, the greater the investment level. Location-based, brick-and-mortar franchises generally have higher initial investments. Building the retail space can be pricey. Picture a fitness studio — you need equipment, like bikes or pilates machines, but also a high-tech sound system, televisions, changing rooms, showers, etc. Not to mention the flooring, interior architecture (walls, stage, various rooms), trade dress and more.

On the other hand, a service-based brand doesn't necessarily require real estate (some may even operate from a home office). Some service-based brands require storage space to house vehicles or equipment that are deployed at the customer's location. Less visible and lower cost industrial spaces are ideal for these franchises. Typically, these spaces require few leasehold improvements compared to a customer-facing retail space.

So what can you expect the investment costs to be for each of these options for a single unit or territory?

While it isn't definitive (there are always exceptions), common ranges are:

  • Brick-and-mortar: $250,000+
  • Service-based brands: under $300,000

2. Ramp-up time

Ramp-up time goes hand-in-hand with investment costs. The time it takes to ramp up to a monthly positive cash flow and establish repeat business both indicate important benchmarks for any sustainable business. In terms of speed, service-based brands are more likely to ramp up quickly because of a lower investment cost upfront and lower fixed overhead costs . Let's consider a moving service brand. Once you have the equipment and employees in place, the month-over-month operation costs are more closely linked to revenue growth; thus, these models can often grow to cash flow more quickly.

Alternatively, a brick-and-mortar brand (like a salon) will have high upfront investment costs (retail space, individual stations, chairs, mirrors, hair wash/dry stations, etc.) and will likely take time to establish a strong customer base in a particular community. But they tend to have more repeat business and durable income streams over time.

Related: The Rise of Click and Mortar — Why Online Businesses Should Consider Opening a Physical Store

3. Scalability

Brick-and-mortar businesses are typically more scalable . Once you have a single successful franchise, it's easier to manage and build an empire by spreading costs over multiple locations. But remember, due to the costly initial investments, building costs will be similar each time you open a new location.

With a service-based brand, rather than building more physical locations to expand, you can expand your territory and drive more penetration within your territories. While this isn't without additional costs (consider gas money, employees to keep up with demand, more frequent equipment maintenance, etc.), it requires incremental investments since your revenue justifies it and creates economies of scale. By purchasing additional territories in a service-based brand, you scale your revenue and income multiplier without the same proportional increase in capital investment.

4. Technology

One area that is relatively equal in terms of usefulness and accessibility is technology. In recent years, technology has transformed the franchise world . Specifically, repeatable but necessary tasks have been streamlined and simplified through technology. For brick-and-mortar brands, it's common to see customers scheduling services directly (hair appointments, fitness class bookings, etc.). For service-based brands, customers can book service calls, and employees can perform tasks in real time to keep business moving, such as ordering parts, creating estimates, etc.

5. Location risk

Location is key for brick-and-mortar franchise brands. It's often a balancing act of finding real estate that is within an acceptable price range and in a popular location that creates consistent repeat business. You will be offering services in a fixed location, so the further away you are from the customer, the less likely the customer will travel to your location. For example, a fitness studio needs to be convenient for customers to come to your location three to four times per week. The more frequently a customer would ideally like to visit your franchise, the higher density is needed for the same market radius.

For a service-based brand, location is not as important for overall success. Since you or your employees will be traveling to the customer's location, there is no site selection risk and you are free to penetrate deeper and deeper into a market. However, it is worth noting that, if you do expand to multiple territories, you may want to consider renting additional warehouse or storage space to optimize efficiency.

Related: Start Your Own Business or Buy a Franchise: Which Is Right For You?

6. Recession resistance

Lastly, one factor to consider lies in the recession resistance of your franchise. Brick-and-mortar brands often offer more discretionary services. These are everyday services to be sure — hair care, nail salon, etc. — but they are not always considered everyday essential services. On the other hand, service-based brands often are essential everyday services that must be performed despite fluctuating market trends — think HVAC, plumbing, yard care or restoration.

At the end of the day, there is no one-size-fits-all franchise for every potential franchisee. But by understanding the basics of these umbrella categories, you can start to consider which business model type matches most closely with your business goals.

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3 Tips for Building an Investor-Ready Franchise Business

F ranchises offer entrepreneurs a proven business model, product or service and marketing strategy. However, they also come with a price tag ― sometimes a hefty one. In addition to a franchise fee, which typically ranges from $25,000 to $50,000, franchisees often have to pony up contractor and professional fees as well as costs associated with signage and inventory. As with any other business, they must also raise sufficient working capital to pay to get launched and running. 

As a result, franchisees must always be on the lookout for funding opportunities to help with some of these costs. Because of the highly competitive nature of business funding, it pays to build a business that will not only get loan approvals from banks and other traditional lenders but also attract independent investors, including private equity firms with more favorable lending terms.

Did you know? One way to get started with limited funding is to open a franchise with low startup costs . However, keep in mind that a cheap cost to entry doesn't necessarily guarantee affordable operating costs. 

How to build an investor-ready franchise

Here are a few tips to help you build an investor-friendly franchise business.

1. Cover all your legal bases.

When you're looking to bring investors into your franchise business, remember that you'll be adding another independent party, the investor, into an already complex web of interactions. To ensure things run smoothly, it's crucial to take up the services of a franchise attorney from the get-go, who will help with things like the franchise agreement, the franchise disclosure document and issues of liability that often carry severe implications for franchise businesses.

Liability issues can weigh heavily on any business, making potential investors shy away from a partnership. Some companies have lost millions of dollars in product liability settlements. This happens even when the business in the suit did not develop the product in question. For franchisees with several units, such liability issues can create a loss-making, highly flammable business environment that potential investors won't want to touch.

In addition to addressing any liability issues and helping with the necessary franchising documentation, a franchise attorney can be helpful when it comes to selecting a business entity, such as a limited liability company or C corporation, which in itself is a critical step that determines taxation regimes and legal rights associated with your business. 

2. Create a solid business and marketing plan.

One common misconception among entrepreneurs venturing into a franchise business is that their role as franchisees will be limited to cashing checks and lounging behind an executive office desk. While the franchisor will often require the franchisee to stick by the original business model, an investor will only come on board if you have a business plan detailing your franchise business's strategic vision and goals, financial projections and comprehensive business background.

Plus, despite the fact the franchisor will also have a marketing strategy in place ― usually complete with logos, banner designs and ad campaigns ― it is vital you develop and integrate your own marketing strategy with the franchisor's marketing plan. Potential investors will often need to see how your establishment plans to interact with potential customers , something that will significantly influence how they assess the profitability of your venture.

To that end, invest in every practical marketing tool a typical business uses to find and close leads. Marketing strategies, such as email and social media marketing , can be quite effective for franchisee operators just starting out, thanks to the 58 percent of potential leads who check their emails every morning. To add to this pool of potential leads, you can use localized ad campaigns and promotion programs that target customers around your area of operation, ensuring your franchisor approves each element of your marketing strategy to avoid branding and trademark issues later on.

FYI: Creating a marketing plan that appeals to your investors is essential. Here are four marketing hacks to help you attract the right investors .

3. Streamline your franchisee's finances.

One of the biggest turnoffs for investors is a franchisee ― or any business, for that matter ― whose finances don't make sense, even when the franchisor is a well-known, profit-making brand. While it is standard for single franchisee units to employ basic accounting systems around the office, franchisees with multiple business units might have difficulty managing finances via simple financial software. This situation often makes the business look bad in the eyes of potential investors.

To remedy this problem, utilize a top accounting system that links up with all your business units, ensuring that any new software or hardware you introduce meets the standards set by the franchisor, if any. Your system should be able to produce comprehensive financial and accounting reports at a moment's notice in any of the locations under your franchise business.

Additionally, be highly selective with the bank you partner with, making sure it understands your business as a franchisee and your intentions to bring an investor on board . A good bank will grow with you by dishing out financial advice and support without interfering in the relationship between your franchisee and your investors.

Investors vs. bank loans for franchises

Generally speaking, the most significant difference between an investor and a lender is that investors tend to lend money to startup businesses, whereas banks prefer to lend money to proven, existing businesses. Here are a few things investors and bank lenders evaluate before working with your business: 

What investors look for in startups

Investors often look for startup features like a product pitch, return on investment potential and equity offer:

  • Your pitch: First and foremost, investors want to know what your big-picture pitch is. Rather than diving right into your financials, investors want to understand your market analysis and how your product or services solve a problem. In other words, an investor wants to see a thorough plan to bring your idea to fruition.
  • Your potential: Investors, more than anything, are looking for a significant return on their investments. Therefore, they want to invest in startups they believe have the potential to be the next big, publicly traded company. One of the primary indicators of a startup's potential is its ability to scale and grow as the market demand increases.
  • Your equity offer: Finally, investors don't charge interest on the money they invest in a company. Instead, they look for a share of the startup's equity. [Related article: How to Know an Investor Is Offering You a Good Deal ]

What banks look for in small businesses

Banks tend to look for proof of concept features like reliable cash flow, collateral and business experience:

  • Cash flow: Banks like lending money to established businesses with a steady, reliable income to minimize risk. To assess this, banks and other lenders will evaluate your revenue streams, profit and loss statements and credit history to ensure you have enough money left over after expenses to repay the loan.
  • Collateral: Additionally, lenders often look for a secondary source to repay a loan if a business cannot generate enough capital. Banks will consider real estate, vehicles, business equipment or other valuable assets to offset their risk. 
  • Experience: Finally, banks and lenders want to know what your business is and if you have enough experience to ensure your venture is successful. They will also review your business plan and financial projections to see how well you know the market and if your past projections have proven accurate.

Where to find investors

Today, finding investors is relatively easy. The trick is making your startup or small business attractive to investors. Here are a few places where you can find investors for your business :

  • Online fundraising platforms: Over the past decade, online fundraising platforms have grown in popularity and many accredited individual investors use them to find promising companies. A few popular equity crowdfunding platforms include Wellfound (previously AngelList Talent), StartEngine (which now also owns SeedInvest ), MicroVentures and Wefunder .
  • Social media: Social media platforms are a great channel to connect with your audience, establish your brand and market your product or services, but it is also an excellent resource to find potential investors. LinkedIn, in particular, is a great place to cold pitch or make strong connections, but you can also use platforms, such as Facebook and Twitter, to foster relationships and have thoughtful conversations.
  • Blogging: One of the best long-term strategies to develop an inbound audience is to start a blog that shares your story, states your goals and illustrates your progress. You can also track down potential investors and read their blogs for insights into what they look for before investing in a young company.

Additional reporting by Skye Schooley and Sean Peek.

Franchises offer entrepreneurs a proven business model, product or service and marketing strategy. However, they also co

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Disney invests $1.5b in epic games, with plans to create new universe featuring franchise ip.

Disney CEO Bob Iger announced the news on the company's earnings call Wednesday.

By Alex Weprin

Alex Weprin

Media & Business Writer

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Disney Epic Games

In a major initiative, The Walt Disney Co. and Fortnite studio Epic Games will create a new “games and entertainment universe” that brings Disney characters from franchises like Star Wars , Marvel, Pixar and Avatar together.

Disney CEO Bob Iger announced the partnership in an interview on CNBC on Wednesday. The new experience will be interoperable with Fortnite and powered by Epic’s Unreal Engine.

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“This represents probably our biggest foray into the game space ever, which I think is not only timely, but an important step when you look at the demographic trends and look at where Gen Alpha and Gen Z and even Millennials are spending their time in media,” he added. “It’s pretty dramatic in terms of the amount of time spent in games, in fact some demographics are equal to or greater than how people are spending their time on movies and television.”

Disney has historically licensed its IP to third-party game studios, though it has a history with Epic Games, with Epic participating in a 2017 Disney accelerator, and with the companies partnering on bringing some Disney characters to Fortnite in the past. (The story prelude to 2019’s  Star Wars: Rise of Skywalker , for instance, was first teased in the game.)

The company also described the new universe as something more akin to a social network, saying that “players, gamers and fans will be able to create their own stories and experiences, express their fandom in a distinctly Disney way, and share content with each other in ways that they love.”

The Epic investment is subject to closing conditions, including regulatory approvals.

On the company’s earnings call, Iger discussed his thoughts on why the company was investing in video games.

“We’ve we’ve tried our hand at video games in a number of different directions,” Iger said. “And actually the one that ended up being the most successful for us was the license, and in fact we’ve licensed I think $9 billion franchises, including the Spider Man franchise, which is the most successful video game last year.”

“I just think that given the demographic trends, and given the success of Fortnite … they’re experiencing a really a great year of both customer satisfaction and growth as they return to some of their roots,” he continued. “We just think as we take our IP from our movies and our television shows and have them expressed in our parks, this is a great way to do it in games. And for us it’s a way to have skin in the game with them.”

The companies also released a teaser video:

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  1. Creating a Franchise Business Plan

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  5. How to Write a Business Plan for Your Franchise

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  6. Franchise Business Plan Template

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  7. Franchise Business Plan Template [Updated 2025]

    Franchise Business Plan Template. If you want to start a franchise business or expand your current one, you need a business plan. Over the past 20+ years, we have helped over 10,000 entrepreneurs and business owners create business plans to start and grow their franchise businesses.

  8. Creating a Business Plan for Your Franchise: What to Prepare Before

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    A franchise business plan isn't just a dedication to everyone who might invest in your vision. It's also an opportunity to tighten your own intentions. Your SWOT analysis will serve you more than it does your funders, but it's integral to your competitive edge. It should include your brand's strengths, weaknesses, opportunities, and ...

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  13. How to Create a Franchise Business Plan

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  14. How Do I Write a Business Plan for a Franchise?

    When writing a business plan for a franchise, you should include the following: Executive Summary: Describe the franchise's model and list successes that it has achieved. For example, you might include how locations have exceeded $1 million in average gross sales when writing a plan for Nékter Juice Bar.

  15. Writing the Franchise Business Plan

    Again, one of the advantages of a franchise business, in relation to creating a business plan, is that most of this information is readily available from the franchise company. You'll usually find ...

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    Writing a franchise business plan is a crucial step toward the success of your business. Here are the key steps to consider when writing a business plan: 1. Executive Summary. An executive summary is the first section of the business plan intended to provide an overview of the whole business plan. Generally, it is written after the entire ...

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  19. How to Write a Business Plan for Your Franchise

    Create a section titled Executive Summary and write a one-page summary of your business and your plan for its success. You may choose to structure it in the following way: Explain the history of the business. Describe the market the business serves and the challenges it faces. Explain how your skills can lend to the business's success.

  20. Franchise Business Plan Example

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  24. Buy an existing business or franchise

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