So far, the process of becoming a franchise owner has had you carefully select a franchise, and then sign a franchise agreement. Unless you’re self-sufficiently rich, the next step for you would be to find financial support. And for that, you’ll need a franchise business plan.
A franchise business plan is a comprehensive, actionable proposal that describes how your franchise business will become successful. It will outline expectations by explaining how much profit you’ll make, and how you’ll make this money. In addition to being an essential part of a financial application, a franchise business plan is also important for helping you determine if opening a restaurant franchise will make you money – thereby allowing you to make an informed investment decision.
Much of the information required for a business plan for a restaurant franchise can already be found in the Franchise Disclosure Document (FDD) that you received as part of your signed franchise agreement. Even so, it’s now your responsibility to create a thorough and detailed guide that can instill lenders with the confidence that you can turn a profit on your new venture.
Ready to start your own franchise? The following steps briefly explain how to write a business plan for a restaurant franchise.
1. Executive Summary
A business plan begins with an Executive Summary that concisely explains your purpose and goals. Briefly describe your main product or service, and list the objectives you wish to accomplish. This section serves as your “elevator pitch” that explains how your franchise location will succeed, and illustrates your concepts and motives without providing too many details.
2. Business Description
This section serves as an overview of your market and competition. The Business Description explains the operations process for serving your customers, and provides a list of your risks and challenges. It goes into greater detail about the product or service you have to offer, describing the type of relationship you expect to have with your customers and the tone you’ll have with them.
3. Management Summary
An important part of your business plan for a restaurant franchise is to show who your leaders are. The Management Summary explains which type of management structure you’ll be using for your restaurant, and introduces the key players that will be handling your day-to-day customer service. Explain their experience and qualifications, and provide any background information that you can. Use this section to demonstrate why your new franchise location is in good hands.
4. Market Analysis
With this section, you’ll begin to provide some context that can help influence investors to see things from your side. Use the Market Analysis section to explain the size of your market, your largest competitors, and how you’ll distinguish your restaurant from the competition. Expand on what you have determined to be the challenges and opportunities for your business. Do your due diligence by performing your research, and relay your understanding of the market conditions in your area.
5. Target Market
Demonstrate your knowledge of your future customers in the Target Market section. This is where your restaurant business plan will describe your target market using their average occupation, age, and income. Most importantly, use this section to explain your strategy for appealing to them and getting them to dine at your restaurant. Think of who your most loyal customers will be, and develop a persona that represents a cross section of your market.
6. Sales & Marketing
This section is your chance to explain how your restaurant will get customers. Go in depth on your sales and marketing strategies to show how you’ll attract customers and develop your brand. Make a pre- and post-launch day marketing plan where you explain how you’ll maintain customer interest in your restaurant. As sales and marketing are mostly controlled by the franchisor in a franchise agreement, use this chance in your restaurant business plan to elaborate on the local marketing and advertising support you’ll receive as a new franchise owner.
7. Financial Projection
This is, by far, the most important part of making a business plan for a restaurant franchise. This section will show how profitable you think your business will be, and whether lenders will get their money back. This financial plan will forecast your restaurant franchise’s profits and sales forecasts. Crucial to your investment application is including a repayment schedule that explains when investors can expect to see a return on their investment.
8. Financial Demands
This part of your restaurant business plan will explain the many costs involved in running a restaurant franchise location. It lists the amount of capital required to get your business off the ground and profitable in addition to your own personal investment and start-up costs. This section is where you’ll put your restaurant franchise’s profit and loss statement (P&L), balance sheet, and cash flow statement.
9. Bonus
Help persuade your investors by adding more sections that gives them a clearer idea of what to expect from your future restaurant:
- A sample menu: Show what your future diners will be eating.
- Location: Provide details on where your future restaurant will be located.
- Design: Use a mood board to help investors visualize your restaurant’s tone and atmosphere.
With all these steps, you now know how to write a business plan for a restaurant franchise! Good luck with your application!
Learn more about franchising in our blog section! Find out how much restaurant franchise owners make, and figure out whether licensing or franchising is the better fit for you!
Click here for more information on franchise opportunities with St. Louis Bar & Grill!
