Franchise System Business Plan and SWOT Analysis

Franchise System Business Plan, Marketing Plan, How To Guide, and Funding Directory

The Franchise System Business Plan and Business Development toolkit features 18 different documents that you can use for capital raising or general business planning purposes. Our product line also features comprehensive information regarding to how to start a Franchise System business. All business planning packages come with easy-to-use instructions so that you can reduce the time needed to create a professional business plan and presentation.

Your Business Planning Package will be immediately emailed to you after you make your purchase.

Product Specifications (please see images below):

  • Bank/Investor Ready
  • Complete Industry Research for the Industry
  • 3 Year Excel Financial Model
  • Business Plan (26 to 30 pages)
  • Marketing Plan (24 to 28 pages)
  • 425+ Page Funding Directory
  • PowerPoint Presentation
  • Loan Amortization and ROI Tools
  • Three SWOT Analysis Templates
  • How to Start a Business Guide
  • Easy to Use Instructions
  • All Documents Delivered in Word, Excel, and PowerPoint Format
  • Meets SBA Requirements

Once a specific type of business become successful, one of the common ways that many entrepreneurs will expand their operations is through the use of franchising. Franchise systems have become extremely popular among fast food restaurants, specialty retail stores, and specific services like maid services. One of the best aspects to developing a franchise system is that they are able to produce very high recurring streams of revenue from the ongoing royalty fees that are associated with franchisees. Usually, a franchise fee is equal to 2% to 8% of the aggregate revenues generated by an individual that has become part of the franchise system. Additionally, many franchises will also require that their partners pay for a upfront fee in order to launch operations. Depending on the franchise, these upfront fees can range anywhere from $20,000 all the way to $100,000 depending on the franchise. Usually, highly established franchise systems like fast food restaurants can command a much higher upfront fee from their partners. For companies that are just getting started with franchising – these fees are typically lower given that they want to drive people to become part of their overall system.

Most franchise system commence operations after the entrepreneur has successfully launched a number of locations to profitability. This is commonly known as the startup portion of the franchise system given that most people who want to become associated entrepreneurs are going to want to see that this business model is economically viable. The most common types of franchise systems that are started these days typically revolve around food service, small business services, and household services. Generally, the higher the gross margins generated from a product or service being sold – the higher the royalty for fee will be on an ongoing basis.

It is somewhat expensive to start a new franchise system given that there are a substantial amount of legal requirements that need to be put into place when these types of systems are created. First, an attorney is going to need to be hired in order to produce the uniform franchise offering circular or franchise disclosure document. This documentation provides the potential entrepreneur with a complete understanding of the costs and associated risks regarding the franchise system. There are a number of other stapes requirements that some jurisdictions have as it relates to promoting a franchise system among potential entrepreneurs. One of the other major expenses at a comes from developing these types of systems is that there is typically a number of marketing expenses that are necessary in order to recruit people to become part of the franchise system. It is not uncommon for the legal fees alone to reach $50,000 for this type of operation. The marketing expenses can easily reach into the hundreds of thousands of dollars.

A franchise system SWOT analysis is typically produced in conjunction with both a business plan as well as a marketing plan. As it relates to strengths, once a franchise system establishes a very strong brand name the ongoing marketing risks are somewhat limited. The gross margins generated from royalties and upfront service fees are typically very high. Also, some franchise systems will allocate a significant portion of their operations to owning and operating company owned stores or protected territories. This is typically the way that these companies start and they are able to capitalize on their protected territories on an ongoing basis.

For weaknesses, a franchise system is going to have substantial operating costs and marketing costs. As discussed above, the legal expenses associated with this type of business are very high as well. Many states have a number of laws in place in order to protect potential franchisees. As such, these expenses need to be accounted for when planning the expected cash needs of the business.

The opportunities for a new franchise system are boundless. Provided that the business continues to become successful, many entrepreneurs want to become part of the franchise system in order to capitalize in the brand-name, products, services, and trademarks associated with the franchise. Once established, franchise systems are an outstanding candidate for working capital lines of credit or business loans that can fuel and expansion.

For threats, economic recessions can have an impact not only on the franchise or but also entrepreneurs that are enrolled as franchisees. This can create a much lower revenue stream for the franchising company given that royalty fees will be lower and people may not be willing to start new franchise owners on an ongoing basis. A modest risk associated with these types of businesses is a change in regulations regarding franchise systems. Again it is imperative that these companies do retain proper legal counsel in order to make sure they remain within the letter of the law at all times.

A franchise system business plan should also be developed. This business plan should feature a three year profit and loss statement, cash flow analysis, balance sheet, and breakeven analysis. Within the business plan, special attention should be paid to the cash flow analysis as franchise systems do require significant amount of capital before they are able to recruit the necessary number of people to recoup the investment associated with developing this type of system. A full demographic analysis showcasing the potential franchisees should also be included in regards to their minimum liquid capital on hand, the amount of investment they’re willing to make, and the required experience within the specific industry in which the franchise has developed its operations. The gross margins for franchise system typically range anywhere from 90% to 95% depending on whether or not any bad debt expense is considered as part of the cost of goods sold.

Of the utmost importance to developing this type of business, is the franchise system marketing plan. As people buy into franchises because of their trademarked brands and operations – it is imperative that a large-scale marketing campaign is rolled out in order to ensure that these businesses are able to reach their intended target market. Many franchise systems will often hire a third-party marketing consultant in order to carry out their marketing and advertising operations. This is especially true for smaller to midsize franchise systems given the fact that men maintaining an in-house marketing, sales, and advertising department is extremely expensive. Most internal departments not only have to deal with recruiting new franchisees but also continuing to promote the products and services offered by the business. Almost all franchises maintain an extensive amount of online marketing coupled with traditional forms of advertising including television, radio, prints, and word-of-mouth campaigns. It can be expected that a franchise system will spend 5% to up to 15% of their aggregate revenues on marketing and advertising costs. As such, this should be heavily calculated in as part of the company’s cost of goods sold as well as the profit and loss statements in order to make sure that these expenses are to be properly budgeted.

Given the rise of entrepreneurship within the United States, franchise systems are extremely popular among people that want to own their own business but do not want to necessarily take the substantial risk associated with developing a new brand from scratch. The failure rate associated with franchise space businesses is substantially lower than independently owned small businesses. As such, many entrepreneurs feel that the upfront franchise fees coupled with the ongoing royalty costs are justified given the fact that these businesses have a very strong rate of success. Of course, economic recessions and changes in the economy may impact the way that these companies do business moving forward from time to time but they are going to continue to be one of the mainstay ways in which new entrepreneurs are able to launch their own businesses.