Franchise business plan examples
Cathryn Hayes - HSBC Head of Franchising
Lenders always worry about the ability of a new franchise to provide enough income for the owner to live on and service any borrowings they have, particularly in the early years. Luckily, many franchisees have a supportive partner behind them who often continues to earn a regular wage.
The additional household income reduces the franchisee’s dependence on the profits of the business. It is therefore important that a franchisee includes a summary of all their domestic income and expenditure in the business plan. This demonstrates just how much money needs to be taken out of the business for them to survive.
Understand the figures
Franchisees often present figures given to them by their franchisor without really understanding what they mean. As a franchisee it is important to take ownership of the figures – particularly the cashflow forecast.
If a franchisee cannot explain them in a convincing fashion, they are likely to be turned down for the finance they need to get the business off the ground.
It’s not just a cashflow forecast
In contrast to the above, we are sometimes presented with a cashflow forecast and little else. The bank won’t just focus solely on figures. The business plan needs to demonstrate that the franchisee has fully researched the local competition and that they understand their market. Whilst the cashflow forecast tells a lender what will happen, the business plan explains how it will be achieved.
It’s not just about the franchisee
With over 800 franchises active in the UK, it can be a mistake to assume that the lending manager knows all about every single franchise, although our specialist franchise units minimise this risk. It is therefore helpful for the franchisee to explain exactly what help they will be receiving and the track record of the franchised business when they present their business plan.
Whilst the majority of business plans are perfectly adequate, we hope these few pointers will help make it easier for franchisees to obtain the finance they need.
Tags: business planning, cathryn hayes, Franchise Finance, franchising, hsbc
