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Business planning is an essential step for those who wants to create a sustainable and long-lasting franchisor’s business.If approached properly, franchisor’s business is rather sophisticated undertaking aimed at monetization of continuously upgraded intellectual property proprietary to franchisor, providing B2B services to franchisees and improving core business model to meet constantly evolving customers’ needs.
It is common to carry out this analysis in three dimensions: macro-, meso- and micro-dimension.
After performing the environment analysis, it is time to move to the stage of franchisor’s business design.
Two main links between these two financial models are set of fees paid by the franchisee to the franchisor and scope of service provided by franchisor to franchisee.
The aim of the harmonization of these two financial models is adjusting both franchise fees and scope of services provided by franchisor to ensure that both franchisee’s and franchisor’s financial forecasts seems feasible and realistic.
Under the franchisor’s business development programme you must aggregate goals and measures related to continuous improving of franchised business model, developing franchise tools and infrastructure, strengthening corporate identity, etc.
It might happen, that after compiling all decisions together you will see that some of them are inconsistent or in conflict with each other.Then you must proceed to describing initial long-term business goals.Generally, when formulating business vision, mission and long-term goals, do your best to answer these questions complexly: Having long-term business goals defined will enable you to use them as a benchmark for validation of other business planning decisions.In this case, you will need to come back to the respective stage of the franchisor’s business planning and redefine the specific decisions to fit organically into complete framework of franchisor’s strategy.After setting long-term goals and actions (also might be called projects or initiatives), you will need to set KPI’s to measure the progress of the strategy execution.These might include expected growth rate of the franchise network, preliminary franchise fees, elements of the franchise infrastructure to be created, scope and frequency of the provision of services to franchisees, etc.The last step of development of the financial models is harmonizing typical franchisee’s and franchisor’s financial models.It shows that the financial model is not customized according to a specific franchisee, but serves as a universal model showing the general financial aspects of any franchisee’s business.However, when preparing the financial model of a typical franchisee, the franchisor should retain the possibility to easily alter the assumptions, so that the model could be used to forecast financial results of the specific franchisees in specific markets.You must start with development of the typical franchisee’s financial model that will serve as a basis for calculating the franchisor’s income and expenditure.The financial model of a typical franchisee helps to anticipate the financial outcomes of a franchised unit.