Franchise Business Plan Template (for an SBA Loan)

By FranchiseFeast Editorial

A lender-ready outline that follows the SBA's traditional business-plan format, with the franchise-specific sections an SBA 7(a) underwriter expects. You fill in your own numbers.

An SBA lender reads a franchise loan differently from a startup loan: the brand is known, so the questions become whether you can run it, whether this territory supports it, and how you will repay the loan out of cash flow. This template follows the SBA's traditional business plan sections and adds the franchise pieces underwriters look for. It gives you the structure and the prompts; the numbers and the story are yours to write. It is educational, not legal or financial advice.

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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 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 and its replacement, SOP 50 10 8.1 (effective October 1, 2026), 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 clearly.
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.

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Before you sign or borrow anything

This resource is for general educational purposes only and is not legal, financial, or tax advice. Franchise laws, the FDD, and franchise agreements vary by state and by brand. Review the full FDD and franchise agreement with a franchise attorney licensed in your state and a qualified accountant before you sign anything or pay any money.

Sources

How this template is built

This is a fill-in outline, not a calculator. It has 10 sections and 59 prompts, supplies no dollar figures, and the dashed boxes are print-only writing space, so there is nothing to type or save on screen. It starts from the sections the SBA lists for a traditional plan (executive summary, company description, market analysis, organization and management, product line, marketing and sales, funding request and financial projections; see the SBA'sbusiness plan guide) and adds two things a franchise loan file needs: section 3, which gathers the FDD facts (Items 5, 6, 7, 19 and 20 and your territory terms) in one place, and an appendix of supporting documents. The point of the FDD section is that the lender can check every franchise number in your projections against a document instead of searching for it.

What the lender's manual requires

SBA lenders followSOP 50 10. Version 8.1, effective October 1, 2026, replaces version 8, which the prompts in section 8 of the template mention, so confirm any figure below with your lender rather than relying on an older summary. As published for use from October 1, 2026, the manual says the following.

Directory. If the brand meets the FTC definition of a franchise, it must be on the SBA Franchise Directory to obtain SBA financing. The lender must check the Directory before submitting or approving the loan and must obtain the executed franchise agreement and any other document the franchisor requires you to sign. A listing is not an endorsement of the brand.
Franchise credit review. For a Standard 7(a) loan (over $350,000), the lender must review credit information about the franchise, such as the number of failed franchisees and cash flow projections provided by the franchisor. Your Item 19 and Item 20 summary in section 3 answers those questions before they are asked.
Equity injection. A start-up, meaning a business generating revenue for a year or less, needs an injection of at least 10% of total project costs, defined as all costs required to become operational. For an initial acquisition of an existing business, the manual sets 10% and says it cannot be reduced or eliminated. It also says 7(a) Small loans are not permitted for change of ownership transactions.
Where equity can come from. Cash that is not borrowed is unlimited. Cash from a personal loan counts only if repayment can be shown to come from a source other than the business's cash flow, and a salary the business pays the owner does not qualify. For a change of ownership, the manual says limited sources such as standby debt and seller debt may supply no more than half of the required injection, and seller debt must be on full standby.
Guaranties. Any individual owning 20% or more, directly or indirectly, must give an unlimited full guaranty. A spouse owning less than 20% must also guarantee in full when the combined ownership of both spouses and minor children is 20% or more. The lender may ask others for a guaranty, for example someone critical to operations, whatever their ownership.
Repayment. The debt service coverage ratio is operating cash flow divided by debt service, where operating cash flow is EBITDA (the lender may make certain additions and subtractions). The manual requires a ratio of at least 1.15 on a historical or projected basis, and for start-ups and other projection-based applications it requires detailed projections with supporting assumptions that reach 1.15 within two years of loan funding.

Worked example: from project cost to the sales the loan needs

Every number here is invented for illustration and is not tied to any brand. Assume a total project cost of $420,000: buildout $210,000, equipment $95,000, franchise fee and related fees $40,000, signage, inventory, training and opening costs $25,000, and working capital $50,000. Match the categories to your own Item 7 in section 8 of the template.

Minimum equity injection: 10% × $420,000 = $42,000. Loan amount: $420,000 − $42,000 = $378,000.
Assumed terms, not a quote: 10 years at 10.5%, monthly payments. Payment is about $5,100.54 a month, or $61,206.51 a year in debt service.
Required operating cash flow at a 1.15 ratio: 1.15 × $61,206.51 = $70,387.49 a year. That is about $9,181 a year more than the loan payments alone.

Now connect that to sales, using the contribution-margin method from the SBA'sstartup costs guide. Assume fixed operating costs of $12,000 a month ($144,000 a year, including a salary for whoever runs the unit) and variable costs of 55% of sales, including your royalty and ad-fund percentages, so the contribution margin is 45%. Sales needed to cover operating costs and debt service exactly: ($144,000 + $61,206.51) ÷ 0.45 = $456,014 a year. Sales needed for a 1.15 ratio: ($144,000 + $70,387.49) ÷ 0.45 = $476,417 a year, or about $39,701 a month. The lender's threshold asks for about $20,402 a year more in sales than covering the debt exactly.

Two lessons follow. Royalty, ad-fund and technology fees have to sit in the cost lines from year one, which is why section 9 says to carry them through every year. And the sales you must forecast are the sales that produce the ratio, not merely the sales that break even. If your Item 19 (where the franchisor gives one) or the units you verified through calls cannot support that level, the plan has a gap a lender will find. Item 19 figures describe the outlets the franchisor counted, and the rule requires a warning that a new franchisee's individual results may differ.

Who signs

Suppose, hypothetically, that the owners are Owner A at 50%, Owner B at 25%, Owner A's spouse at 10%, and an unrelated investor at 15% (illustrative percentages, not a recommended structure). Owners A and B each give an unlimited full guaranty because each holds 20% or more. A's spouse holds under 20%, but the couple's combined interest is 60%, so the spouse also guarantees in full. The 15% investor is not caught by the 20% rule, though the lender may still ask for a guaranty. List every guarantor and the collateral each pledges in section 8. The manual calls for an owner financial statement from each 20% owner and proposed guarantor, SBA Form 413 or the lender's equivalent, dated within 90 days of submission to SBA.

Sources retrieved September 29, 2026. Education only, not legal or financial advice. Your lender's written requirements govern.