Franchise Business Plan Template (for an SBA Loan)

1. Executive summary

A one-page overview that sells the concept, the brand, and the loan ask. Often the only section a loan officer reads closely before deciding to dig in.

What to include

• Business name, proposed location or territory, and the franchise brand you are buying into.
• One or two sentences on why this franchise: your background, industry experience, or personal rationale.
• Total project cost and total loan amount requested (categories only; the dollar detail goes in the funding request).
• A one-line summary of ownership and relevant experience.
• Timeline: target signing date, buildout and opening dates, and expected path to steady cash flow.
• Whether this is a new ground-up unit or a resale or transfer of an existing franchised location.

2. Company description

Establish the legal entity, the franchise relationship, and the customer need this location serves.

What to include

• Legal name and structure of your operating entity and state of formation.
• The franchisor's legal name and brand, and your franchise agreement term (initial length, renewal options).
• What need the business fills in your local market and who your target customer is.
• Your competitive advantage as the operator (site, capital, local relationships, experience), distinct from the brand's own.
• If a resale or transfer, the prior owner's tenure and stated reason for selling, cross-referenced to the Item 20 turnover data below.

3. Franchise and FDD summary

Pull the FDD facts a lender needs into one place, so underwriting does not have to hunt through the whole disclosure document.

What to include

• Franchisor legal name, brand, FDD issuance date, and the state version you reviewed.
• Item 5: your actual initial franchise fee, from your FDD.
• Item 6: every recurring fee you will owe (royalty, ad or brand fund, technology, transfer, renewal, audit) with the exact rates from your FDD.
• Item 7: your low-to-high total investment range, broken out by the franchisor's categories.
• Item 19: summarize any financial performance representation the franchisor discloses, or state plainly that it makes none. Do not treat franchisor figures as guaranteed results.
• Item 20: the current outlet count and the trend in openings, transfers, closures, and terminations, system-wide and for your region if available.
• Your territory terms from the franchise agreement (exclusive vs non-exclusive, and how it is defined).

4. Market analysis and territory justification

Prove your specific territory can support the unit economics the franchise system assumes. Lenders want your independent verification, not just the franchisor's word.

What to include

• Define your proposed territory precisely (address and radius, ZIP codes, or demographic boundary).
• Population, household income, and age profile of the territory, cited to your own data source, not only the franchisor's materials.
• Direct and indirect competitors already operating in the territory, including any other units of this same brand nearby.
• Traffic, visibility, or drive-time data supporting the site, if brick-and-mortar.
• Why this territory specifically, versus others the franchisor offered.
• The industry outlook (growing, flat, declining) with a cited source.

5. Organization and management

Show who will run the business day to day and that the team can execute the system, with franchisor support factored in.

What to include

• Legal structure and ownership percentage of every owner who will be named on the loan.
• A resume summary for you and any co-owners or key managers.
• Your year-one staffing plan: roles, headcount, and reporting structure.
• The franchisor training and ongoing support you will receive, from FDD Item 11 and the franchise agreement.
• Any advisory board, mentor, or existing operator of this brand you are relying on.

6. Products and services

Describe what the franchise sells and how much of the offering is fixed by the franchisor versus open to you.

What to include

• The core products or services required by the franchise system.
• Required or approved suppliers, if the franchisor mandates specific vendors.
• Any local customization allowed versus what is fixed brand-wide.
• Brand standards that materially affect your cost structure or staffing.
• Any planned future expansion to additional units or territories with this brand.

7. Marketing and sales

Show how customers will be acquired locally and how much of that cost is controlled by the franchisor versus you.

What to include

• The national or regional brand-fund contribution rate and what it funds, per Item 6.
• Any required local marketing spend or minimum set by the franchise agreement.
• Your own local marketing plan (grand opening, local SEO, community outreach) and who executes it.
• Your sales process and customer-retention approach for this model.
• The franchisor-provided marketing tools or national accounts you will use.

8. Funding request and use of funds

State exactly how much you are borrowing, map it to the FDD Item 7 categories, and show how you will meet the equity-injection and personal-guarantee requirements.

What to include

• Your total project cost (built from your Item 7 categories) and the total 7(a) loan amount requested.
• A use-of-funds table: one row per cost category (franchise fee, buildout, equipment, signage, opening inventory, training, working capital, closing fees), split between loan proceeds and your equity.
• Your equity injection: the source of the down payment, the dollar amount and percentage you contribute, and confirmation of the current minimum with your lender. The SBA general minimum has been at least 10 percent for startups and changes of ownership under SOP 50 10 8, but verify the current figure with your lender, since the rules change.
• Your personal guarantee: which owners must sign. The SBA has generally required every owner of 20 percent or more to guarantee under SOP 50 10, but verify the current threshold with your lender, since the rules change. List each guarantor and any collateral pledged.
• The loan structure requested (term, 7(a) variant, any seller note and its standby terms).
• Your repayment source: business cash flow, referencing the debt-service coverage figure you calculate in the projections.

9. Financial projections

Demonstrate the unit can service the requested debt, with the franchise's ongoing royalties carried through every year.

What to include

• Trailing three years of financials, if this is a resale of an existing unit.
• A five-year forecast (income statement, cash flow, balance sheet), with monthly detail for year one.
• Your sales-forecast assumptions and their basis: franchisor Item 19 if disclosed, comparable units you independently verified, or your own build-up. Label the basis honestly.
• The recurring franchise costs carried through every year, not just year one (royalty, ad fund, technology fees).
• A break-even analysis: the month you project break-even and the assumptions behind it.
• Your debt-service coverage ratio for the requested loan, compared against your lender's minimum threshold.
• A personal financial statement and cash flow for each guarantor.

Before you put numbers here: Build these projections yourself from your own FDD Item 7 cost categories, the franchisor's Item 19 only if it discloses one (many franchisors make no Item 19 disclosure, and any figures they do give are their own historical results, not a promise of yours), and your own defensible assumptions. This template supplies no revenue or profit figures. Review your numbers with your own accountant and lender before you rely on them.

10. Appendix

Attach the underlying documents so the underwriter can verify every claim in the plan.

What to include

• The complete FDD and the execution-ready franchise agreement.
• Personal financial statements (such as SBA Form 413) and tax returns for each guarantor.
• Business tax returns for the trailing three years, if a resale.
• Resumes for all owners and key managers.
• The lease, purchase agreement, or letter of intent for the site, plus buildout bids.
• The franchisor site-approval letter, if issued, and required licenses and permits.
• Your organizational documents (articles, operating agreement) and credit histories, if the lender requests them.