Historically, a business plan is mostly a financial plan and analysis, specifically focusing on: "Why I need your money, what I will do with your money, how and when you will get your money back, and what a great guy I am and what a great business this is; or, why you should give me the money." It is usually a highly stylized presentation with numerous spreadsheets and exhibits.
This is a justifiable focus for most business start-ups since it is common knowledge, especially among lenders and investors, that many new businesses fail because they "run out of money." The available money usually dries up quite quickly, that is, during the start-up phase of the business. Owning a franchise will help prevent this from happening, thus the need for a different approach to the franchisee business plan.
The franchisee business plan must be a total success plan, not just a financial plan. It will, of course, include the expected financial elements mentioned above. However, a great deal of the franchisor's vision, mission, philosophy, operating procedures and experiences must be blended in with and balanced by your firsthand knowledge of factors in the local marketplace. These elements are both needed to allow you to repeat the successes of other franchisees.
In the decision-making process of acquiring a franchise you will have already obtained the necessary local market knowledge for the plan:
Your franchise opportunity research has outlined the various types of franchise arrangements you might consider:
Typical franchise types:
Less typical franchise types:
Your selection of franchise type will have a very significant impact on your franchisee business plan. For example, a single-unit, 1200-square-foot retail outlet franchise plan will be considerably easier to prepare than a franchise hotel development plan for an area development franchise with sub-franchise rights granted by an off-shore franchisor.
It has probably become apparent to you by now that the preparation of the franchisee business plan, as well as your ultimate success as a franchisee, will be pretty much be the result of your own effort. In order to write a franchisee business plan that has credibility, it is imperative that you do all your own research. All the analyses need to be examined from both the macro and micro points of view, especially competitive analyses. Your personal support staff is limited at best. It is likely to be made up of your spouse and family, those you pay to prepare the document in its final form and your CPA and attorney.
Once you have signed a franchise agreement, you will find that your franchisor is in a position to provide the information you need from him in order to complete the plan. In some cases franchisors provide their franchisees with business plan formats on disks with blanks to fill in for a specific franchisee situation. These are usually handed out during the franchisor's training program. Since it is likely you will want this information prior to training, you will begin the delicate task (which will last the lifetime of the franchise) of obtaining from your franchisor what you need, when you need it, without impairing the franchise relationship.
Unless the corporate executive is willing to create a precise total success plan, he or she should make a lateral move to another organization in which demonstrated skills may be capitalized upon. The reason is that the decision to be a franchise owner is one from which there is only, at best, a very painful retreat, which is very likely to seriously impact both personal financial condition and ego. From the moment the franchise agreement is signed, personal negative cash flows begin and continue until the business reaches break even. A corporate executive should view his or her franchisee business plan as a set of personal "no retreat strategies." There are very few places of comfort to go back to, unless the franchisee business plan results in success.
Quite often the franchisee business plan is undertaken to raise money for the business start-up. Even if the start-up is completely funded, the plan should still be written with the following audiences in mind:
The reasons for writing the franchisee business plan, other than raising funds, are to provide:
The steep negative cash flow which can occur from the point of franchise agreement signing to break even on operations is punctuated by a host of activities the typical corporate executive may never have undertaken or has long forgotten. The time between events in the start-up will feel especially short, since the franchisor has the formula down pat and is prepared to implement it swiftly. Unless you are obtaining a turn-key franchise, you can look forward to doing at least the following during start-up:
The primary purpose of your franchisee business plan is to see to it that you get through this critical start-up period successfully. Your franchisor can help, but in the last analysis you must do it. Plan well, for unless you do, there will be no tomorrow.
2.1: Franchise vs. Business Opportunity
2.3: Preparing To Buy a Franchise