Franchise Biz Plan: A Remedy for Failure

By Jeff Elgin of Entrepreneur.com



As with any other business, one of the most important elements of a franchise start-up is writing a business plan. A business plan forces you to anticipate and answer a number of questions about the challenges you'll face and the expectations you have for your new business.

The creation of your business plan is also essential if you're going to need financing from third-party sources, since this is probably the first document they're going to ask you for.

Preparing a business plan is substantially easier with a franchise than it is for an independent business start-up since there is so much information already available. During the sales process, the franchisor typically supplies you with a great deal of verbiage you can use to create the narrative portions of the business plan. You can also often find much of the financial information you'll need in the earnings representations of their disclosure documents.

In addition to the sections that are usually addressed, a business plan for a franchise will have a section outlining the track record, personnel and support available from the franchise company. You may include items like the franchise company's sales brochure or FDD as attachments to your business plan. This additional section can provide a much higher degree of confidence for people like lenders that you're trying to impress with your plans.

The five key sections in a typical business plan, whether franchise or independent business, include:

1. Introduction. This section involves a complete description of the business including an identification of the product or service that will be sold, the size and competitive nature of the market for the business, a description of the operational approach that will be used to take the business to market, and the challenges and risks associated with the start-up.