By Natalie Veli
“Those who fail to plan, plan to fail”
When anybody sets up a new business, the business plan is the most important document. In this case, when one prepares for expansion of an existing business, there are a few additions that need to be implemented and is then referred to as a Franchise Business Plan.
What is a business plan?
This is a document that sets out the business’s future objectives and goals as well as the strategies on how to achieve them.
Why do we really need a business plan?
There are many reasons, but two very important ones are:
- To enable you to track your development over time based on your objectives and goals that you have set yourself to achieve
- To provide an overview of your business for potential stakeholders, lenders and suppliers
The structure of a Franchise Business Plan
There is no ‘one size fits all’ approach to structuring your franchise business plan. The document must reflect your personality and that of your business as well as the fickle elements that prevail within your industry. More importantly, the franchise business plan is firstly a document used by yourself as franchisor as a roadmap for your expansion plans Your business plan must be factual, thorough yet brief and should be written in a friendly, everyday type language style. You don’t want your business plan to come across as intimidating or confusing to the reader.. An exception would be if the business revolves around technical complexities which can be included in an executive summary.
To help members of your target audience that may not be familiar with franchising, it is best to start out with a brief explanation of the franchising concept. Make it very evident that a franchisee provides capital and, guided by the operations manual of the franchise and under your ongoing supervision, accepts full responsibility for day-to-day operation of the local unit.
What information is required to compile a franchise business plan?
- Company details such as registration name and number, founder’s name/s and establishment date
- Personal details of the current owners/directors
- Trademarks, patents and other intellectual property
- Management structure – number of staff and positions using an organogram/organisation chart and/or plans to grow the infrastructure as the franchise network grows
- Names of the business’s products and services and detail on the supply chain
- Identification of the current market and who your target market is
- Marketing plan and budget
- Competitor analysis
- Expansion plan timeline and approach including geographic expansion plan and number of units planned per year
- Franchise fees
- Franchise package to be developed (documents and recruitment)
- Financial projections for the franchisor based on the number of franchise openings planned per year and the growth in infrastructure to support these franchises
Annual Business Plan Review
For the business plan to retain its relevance over time, it must be regularly updated. Most companies have found that an in in-depth review of the business plan should be undertaken once a year. Plan for the forward planning of the business, make time with staff members and stakeholders to get some input from them and their views on what needs to be focused on as well as goal completion and setting of new goals.
By the time you do your first review, you will have joined the ranks of franchisors. Review this important area of your business as well.
Ask your franchisees if they happy, are they making money, are they sufficiently motivated to build the brand at local level, what can we do to improve relations and enhance franchisee performance?
In your experience, is franchising delivering on its promise? Should you stick to the current formula or can it be improved on or does it need to be changed?
A franchise business plan will help you focus on your goals and objectives to expand and assist in tracking where you are in the process of achieving them. Make sure you are focused on your strategy, tactics and activities for execution so that you can manage your milestones.