What is a Franchise Development Plan?

You’ve done the preliminary research and taken the decision to franchise your business. Now, you need an action plan, or business plan for a franchise – this is formerly known as a franchise development plan.

What is a franchise development plan?

It is a comprehensive blueprint detailing the establishment and development of a business model for your franchise system. It defines what you want to achieve, and how you’re going to do it.

How does a franchise development plan differ from a traditional business plan?

A franchise development plan shares similarities with a traditional business plan, but needs to take into account not just one, but two ‘companies’ – the franchisor and the franchisee. While the franchisor and franchisee work together towards a unifying goal – the success of the franchise – each has specific individual and unique needs.

What information should I include in my franchise development plan?

Franchisors need to detail every aspect of the franchise business, including:

• Franchise set-up process and procedures
• Organisational hierarchy
• Administrative processes and procedures
• IT systems
• Brand management
• Market and industry analysis
• Territory planning
• Operational requirements
• Drafting a franchisee operations manual
• Drafting a franchise agreement
• Drafting template franchisee business plans
• Franchisee recruitment and training
• Franchisee growth projections
• Marketing, advertising and promotions strategies
• Sales strategy
• Financial data and projections for the short-term (two years) and medium-term (five years)
• Arrangements with financial institutions
• Supporting documentation regarding tax issues, business registration, trademarks, licences, lease agreements, and other legal documents.

Can I draft a franchise development plan myself?

As a successful business owner, no one knows the ins and outs of your business better than you. But, while you will be able to provide tremendous input into your franchise development plan, you should seek the advice of a franchise consultant to help you with the specifics of franchising, and a franchise attorney to deal with the legal issues.

Why do I have to have a franchise development plan?

There are three principal reasons:

• It provides a practical roadmap for the roll out of your franchise system
• You will need to provide financial institutions with your franchise development plan when seeking finance
• To reassure potential franchisees who will ask if you have such a plan in place.

Author: Franchise Finder, Online Directory of Franchises and Business Opportunities in South Africa