Building a better business plan to franchise your business

When building a strong franchise strategy, I recommend first “packaging” the business, perhaps first in your mind, then of course on paper, with technology, processes, and documentation, but first, decide what this model is that the franchisee will replicate. . Often times, an entrepreneur handles more aspects in the corporate business than a franchisee will be tasked with at opening, which can be a good thing: keeping things simple in franchising has never been proven to be a bad thing. Franchisees like, appreciate, and generally thrive in simple, structured environments with fewer open variables. Perhaps you decide to shorten the menu…possibly decrease the number of services offered or it could be that the franchisee will not be operating a production facility, just the retail part of their business. Regardless, the franchise business plan must define this model clearly and precisely in order to understand the product being sold as the franchise program takes shape.

The next stages of franchise strategic planning should revolve around research. This research should be strategic in nature and focus on the franchise market, not the consumer market. We are not so much interested in the product or service provided to your customer as we are in comparing franchises to similar franchise brands. Who offers a similar franchise model based on your industry? What success stories have there been in your industry throughout the franchise market? In most cases, there are examples of good, bad, and ugly ways to approach the franchise market, so we generally suggest replicating the good ones and avoiding the other two options. By coordinating FDD of competing brands, interviewing people in the industry, and even visiting a few locations of competing franchise brands if possible, you’ll be able to formulate your strategic mission and understand the best path to success. Every franchise has a value proposition, it is important that you understand what your brand brings to the market and how you will effectively attract, sign and retain franchisees for your system.

As your franchise concept takes shape, you now need to start laying out the framework for finances, fees, and other numbers relevant to the expansion plan. Franchise fees should be determined by reviewing the costs associated with training, support, sales, and marketing related to running the franchise. A validated franchise fee should be able to be explained to a buyer and easily understood. You will fail if you give the impression that you chose numbers because you thought they sounded good, approached the market with confidence and an understanding of what each franchisee gets out of the relationship and why numbers add up to a strong value proposition. Royalties, the main profit center for most franchise systems, are absolutely critical to the success or failure of any franchise system. significant relationship between both entities. Advertising requirements must span national, regional, local and cooperative strategies, and each must be carefully managed to provide franchisees with a meaningful reference point to invest in building the brand in their market. Because franchising is a business of scale, the magnitude of every decision you make related to your business, your model, and your brand increases significantly, one wrong move up front replicated many times through franchisees could be disastrous for your business. brand and business.

Then it’s time to start understanding the markets. The franchise business plan should describe which markets make the most sense for your company. Understand your consumer demographics. Know the analysis of your territory and have a good plan to position your franchised units. Territory disputes top the list in the categories of disgruntled franchise relationships. Take the time and investment to fully understand how and where to place your franchisees to avoid cannibalization and underutilization of markets.

A franchise business plan should lead the way for a franchise expansion model. The vision, mission, competitive landscape, and clear directives related to how to achieve your growth goals must be explained, documented, and most importantly, validated as to why they are possible and how you have reached these conclusions.