CHAPTER 3
THE
FRANCHISOR
BUSINESS
PLAN
IN THIS CHAPTER THE STUDENTS:
Understand what is meant by a business plan
Identifying and Understand the elements of a
franchisee recruitment package
Learn how to do a franchisor business plan
feasibility study.
3 MAJOR COMPONENT OF FRANCHISOR
BUSINESS PLAN
Franchisors Business Plan
Franchisee Recruitment Package
Franchisee Operations Manual And Success Package.
THE FRANCHISOR BUSINESS PLAN
Management, organization, and
administrative policy Managing the
marketing process Sales and
marketing research
Managing the operations process
Location and site selection Accounting
practices and fiscal responsibilities
deemed
THE FRANCHISOR BUSINESS PLAN
Appropriate, along with the realistic
financial projections Based on the
strategy to be followed and the market
Conditions anticipated; management
information systems
And legal documentation for
determining the franchisor- franchisee
relationship and anticipated activities
of each party
FRANCHISEE RECRUITMENT PACKAGE
Includes disclosure
documents, recruitment
and advertising
brochures, and
franchising agreements
and contracts.
The business logical flow
of topics:
FRANCHISEE RECRUITMENT PACKAGE
The objectives of the franchisor
firm The initial capital and
expected investment required of a
potential franchisee Personal and
other qualifications a potential
franchisee must have Training
provided by the franchisor to the
franchisee Anticipated benefits and
responsibilities of becoming a
franchisee
FRANCHISEE OPERATIONS MANUAL AND
SUCCESS PACKAGE.
Contains elements of the following
items:
Operations manual
Financial and bookkeeping systems
FRANCHISEE OPERATIONS MANUAL AND
SUCCESS PACKAGE.
Advertising and promotional
packages
Sales manual
The franchisor or franchisee
support package Training
manual
Continuation
FRANCHISE FEASIBILITY STUDY
Franchise feasibility studies means a study carried out to find
whether a company can be a successful franchisor.
The study is conducted on companies ranging from well
established concerns to a small operation of one or two units,
or simply a concept that bears the characteristics of a
successful franchisor.
FRANCHISE FEASIBILITY STUDY
Contain sufficient information to enable either a franchisor or a
franchisee to make a good decision.
The five content sections of a feasibility study :
Executive summary
Marketing segment
Management segment
Finance, accounting, taxes and Legal requirements
Appendix
EXECUTIVE SUMMARY
It tells the story of the franchise venture and sparks the
interest of any outsiders. This summary must not be more
than three (3) pages.
Attached to it is the complete business plan or proposal. It
consist company name, type of business, company
description, key personnel, start-up schedule and competition,
funds requested, funds use statements, and fund repayment
ability.
MARKETING
It concerns the distribution of goods and services to existing
and potential customers to satisfy some want or need.
ELEMENTS OF MARKETING TO BE
ANALYSED:
Major marketing objectives
Marketing plan and pricing strategy
Target market analysis
Pricing strategy
Mark up pricing
Franchisee recruitment plan and flowchart
Franchisee prospectus
Franchisee sales and advertising
Franchisee location criteria selection
Site location
Grand opening plan
Promotion and advertising
Marketing to the franchisee
MANAGEMENT
It is simply defined as getting things done through people. The
two main reasons for failure in business are poor management
and lack of capital.
Elements:
Headquarters organization
Franchisee organization
Operations manual Training manual
PERT chart
FINANCE AND ACCOUNTING
The major accounting records to be kept by a franchisor and a franchisee
would at the very least include the following:
Start-up or turnkey costs (itemized)
Financial position for starting franchisors system Pro forma balance
sheet
Pro forma income statement
Pro forma cash flow statement
Breakeven analysis Ratio analysis
Provision for taxation
LEGAL REQUIREMENTS
It must be Satisfied, such requirements
usually rest on legal opinion versed in
franchising law. Typical factors covered in
the legal agreement include:
Business structure License, contracts, and
permits Types and anticipated cost of
insurance Disclosure documents (uniform
franchise offering circular UFOC)
The franchising agreement itself Conditions
integral to the franchisor-franchisee
relationship Possible termination
APPENDIX
It is an important visual aid containing illustrations,
diagrams, analysis, and exhibits referenced throughout the
franchise feasibility study.
An expanded appendix would include the complete training
manual, operations manual, advertising and promotion
packages, sales manual, site and store layouts, franchisee
recruitment presentations, charts, graphs, diagrams, layouts,
and other materials which may enhance the franchise
activities.
THE FRANCHISE PERT CHART
It presents a visual sequence illustrating each development
step and function to be completed before a franchisor should
open a franchised business. A complete franchise PERT chart
would include the following phases:
PHASE 1 RESEARCH AND ANALYSIS
PHASE 2 ORGANIZATIONAL DEVELOPMENT
(EXTERNAL AND INTERNAL)
PHASE 3 MARKETING TO FRANCHISEES
PHASE 4 FRANCHISEES SELECTION
PHASE 5 SITE (BUILDING) AND TRAINING
PHASE 6 START-UP AND FEEDBACK
End of Presentation
Thank you!
