One expense that management has less control over are franchise fees. Most of the fees charged by the franchising companies brands are assessed as a percent of a source of revenue. Therefore, owners and operators have mixed emotions when franchise-related costs rise. To assist hotel management and ownership in their assessment of the franchise-related costs they are paying, we have analyzed data from 1, U.
Things have changed a lot in the intervening years. Today, the extremely rigid Franchise Disclosure Document, which is proffered by a franchiser before any agreement is pursued, must contain a preordained list of 23 items.
Most franchise agreements run 75 pages or longer.
Compared with these highly-formatted documents, a franchise business plan tends to be much shorter and focus on the dream. The main difference is that it must address in detail the economics of both the franchiser and the franchisees - and show how the parent and its affiliates will be able to make money together.
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The Basics As with any business plan, you should expect to see several sections laid out in a franchise plan, including most vitally an introduction or abstracta management overview, a marketing strategy, detailed financial projections, and the financial requirements for investing in a purchasing a franchise.
Again, you might want to do additional research - even just spend a few minutes on Google - to learn more about and verify the backgrounds of everyone involved. Where you would normally find industry analysis in a business plan, most franchise business plans typically include a franchise overview, along with a description of the market the franchise would be entering - and its competition.
These should be thorough, and lead seamlessly into a marketing plan. The plan should specify how territories will be carved up, and how many locations per territory a franchisee will be allowed or expected to open. Finally, a franchisor should convey a sense of culture and personality in his or her business plan.
Look for a franchisor to display confidence and ambition as well as a sense of loyalty to the prospective franchisees in the proposal. Will the Marketing Strategy Work? How is the business going to attract new customers? Why will the product or service seem attractive to customers?
What role do you as an owner or investor need to play in funding and facilitating local marketing? This section should answer those questions. It should also include detailed advertising plans for the future, including time frames, budgets, and specific marketing tools to be employed, says John E.
Clarkin, a professor of entrepreneurship at the College of Charleston. If so, are the solutions the plan proposes viable? Understanding and Evaluating the Financial Details The financial section of the business plan should provide a franchisee with information about the investment necessary to be successful, as well as the expected return on that investment.
The financial section is typically divided in two parts: Financial projections and financial needs. In the first section, you should find detailed income statements, cash-flow estimates, and balance sheets for estimated income.
As a would-be owner, you should be wary of projections that seem unreasonably high, or that ratchet up too quickly. Rosy projections suggest the franchisor has not left enough room for the sometimes-inevitable snag, delay, or complication.
The second section on needs should include a thorough tally of all the costs involved in starting up a franchise, including the initial capital needed to cover early marketing expenses as well as the operating losses incurred during the start-up phase.
The breakdown of marketing funding should be re-evaluated here, and the total amount of capital needed from both parties should be clearly laid out. Any loans need to be included, including what the franchisee is expected to put on the line.
Other documents related to personal and business finance should come attached in the "exhibits" appendix at the back of the plan. These are designed to provide supporting information and detail, and they are definitely worth a look.
Evaluating a Franchise Business Plan:This report is an attempt to compare the advantages and disadvantages of franchising which is one of the most known business model.
. Most franchise agreements run 75 pages or longer. Compared with these highly-formatted documents, a franchise business plan tends to be much shorter and focus on the dream. International Franchising Industry Analysis - Cost & Trends International Franchising in at a Glance Franchising outside of the United States presents a different set of opportunities and challenges from franchising domestically, including different franchise structures and distinct cultural and legal frameworks.
Analysis of Franchising Strategy. Print Reference this. Disclaimer: This work has been submitted by a student. This is not an example of the work written by our professional academic writers.
You can view samples of our professional work here. Franchising, as an alternative form of capital acquisition, offers some advantages. The primary reason most entrepreneurs turn to franchising is that it allows them to expand without the risk of.
One expense that management has less control over are franchise fees. Most of the fees charged by the franchising companies (brands) are assessed as a percent of a source of revenue. Therefore, owners and operators have mixed emotions when franchise-related costs rise.