Franchise: the secrets behind a good business plan

An article from the Franchise special issue of L’Express. In newsagents since March 17

Before signing a franchise agreement, you need to draw up a business plan. In other words, a roadmap that will guide your project. To set it up, start by conducting a market research, by cross-checking the data that the franchisor has communicated with your own information.

Do not stick to the franchisor’s data

“Meet franchisees who do not necessarily appear on the list provided by the brand. These act as showcases, but do not always adhere to the average of the network,” warns Christophe Girard, director of Initiative Essonne, a structure to support business creation. Also indicate the future rents, the right to the lease, the work to be performed … All to the nearest euro, or almost.

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Also indicate the financing you need, the size of your contribution, bank loan, honorary loan … Then make a preliminary income statement. Again, it is not a matter of sticking to the franchisor’s data alone. Adapt these quantities to your catchment area and your type of customer base.

Another tip: divide your revenue by purchasing channel (on-site, in-store pickup, internet, delivery, etc.). In the event of a new health crisis, you will be able to quickly identify the points you can trust. Conversely, detail your expenses: goods, staff costs, rent, taxes …

Do not minimize costs!

When you deduct the expenses from the turnover, you get the expected operating profit. Be realistic, do not minimize costs! Likewise, do not neglect cash flow needs. “This is the amount available in your current account. It will be used to establish the connection between the payment terms for your various partners. Again, think big,” Christophe Girard insists.

Once these large financial masses are established, you need to calculate three significant factors for the profitability of your future franchise: the margin rate (the difference between the selling price and the purchase price), the rental effort, and the payroll. Even if you do not pay yourself any salary during the first two years, you must include this salary in your forecast.

Finally, plan at least two scenarios: one realistic, the other pessimistic (example: six-month closure). This expectation allows you to be more reactive in the event of a hard blow.

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“I made 17 versions!”

“I made 17 versions of my business plan!” griner Frédéric Sourdoire. This recent King Marcel franchisee (burgers) in Nanterre (Hauts-de-Seine) is hardly for fun. He was to open his point of sale in February 2020. “The franchisor had offered me a great location in a newly rehabilitated area on an industrial wilderness, with universities, offices, a cinema complex … I started from scratch, I was not buying back business, so I built my plan around the number of burgers that had to be sold every day to reach my breakeven point, “he recalls. “He needs to rework his plan and his preliminary budget.” Given the context, I had to rely more on deliveries, which in addition generate less margin than on-site sales because of the cost of delivery platforms, “he explains. then negotiates fiercely with his landlord. “Either he gave me a reduction of the rent, or we let it stay there and we went into conflict. At the same time, the bank gave me a deferred repayment of nine months, against three originally planned. “He finally opened his business in mid-December 2020. Since then, he has adjusted to reach his famous breakeven point.” More than a year after the opening, the profitability is not there yet, but I am not losing money, “he concludes. A first step.

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