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Use a Business Plan Format to Analyze and Improve Your Franchise Operation


Franchisors and franchisees can use a business plan as a way to evaluate and measure the performance of their franchise operation.

Traditionally a business plan is constructed for a multitude of reasons including starting up a new business, raising capital or using the plan as a basis for operating the new business. The components of a well written business plan require that key information be gathered and specific questions be answered. As a result, the business plan can be an excellent way to evaluate the performance of a exiting business and establish an operating plan for the future. In this case the future could be from one to two years.

By its very nature the construction of a business plan drives the need to gather critical information The activities associated with the construction of a business plan can provide a franchisor and franchisee an operating tool that touches all bases. Consider an analogy to getting a comprehensive physical exam that includes all aspects of personal physical health including lifestyle and behavior.

The basics of a business plan will drive the entire process. The larger and complex the franchise operation obviously the more detailed and comprehensive the plan. Following is a suggested format to follow.

  1. Summarize the business and keep it short and concise: Start with a brief overview of your franchise business strategy. Are you in a high growth market or are you providing a product or service that distinguishes your business from existing businesses?
  2. Describe the stage your business is in: How is sales performance? Is the business meeting its sales and financial goals? If not where is it falling short?
  3. Competition: Market conditions and the competition should be included. How large is the potential market? How many franchises or businesses are the same or similar to the one you offer?  Is the market growing, shrinking going flat?
  4. Consumer analysis: Which marketing promotions offer the best vehicles for reaching your customers? Do a cost benefit analysis of promotional programs.
  5. Franchise Competition: Include an overview of those firms and their products and/or services that you are in direct competition with. Identify the market leader and define what makes it a leader. Emphasize those characteristics of the firm or offerings that are different than yours. What makes your product or service significantly better than competitive offerings?
  6. Operations: Review any important operational aspects of the business. Are there any operational weaknesses? Are the operating systems fully in place and functioning effectively?
  7. Staff: Focus on key people and positions. Any weaknesses in the staff? Are changes needed?

Recap the results of the responses to provide an overview of your franchise performance and the current position of the company. Based upon the results you can identify areas that may require attention and focus.

2013 FranchiseKnowHow, LLC

Ed Teixeira is the President of FranchiseKnowHow, LLC. He can be reached at franchiseknowhow@gmail.com

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