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!