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How to write a Franchise Business Plan

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The franchise business plan.

Business plan deals with all aspects of your business, from forecasting sales, costs and overhead expenses to raising the funding necessary to finance the business forecast.
The creation of your education franchise business plan is also essential if you need funds from any third-party source if you want to own an international school franchise. Let’s see how to make a franchise business plan.
In completing the plan you will be considering all of the financial aspects of developing your Licence, from the most effective way of acquiring the requisite equipment to the cash flow implications of alternative staffing levels and various other costings. Overstaffing in the early days in anticipation of rapid growth may seem sensible, but is not. The reality is that in the early days cash will be flowing out as you build your business client base and consumer presence, but remain encumbered by overheads and set up costs.

The following example demonstrates how break-even calculations can be applied for a school of English:

  • Your Cost of Sales is:  20 % of sales
  • Franchise/Licence Fee is: 12 % of sales
  • Your bad debts are:     1 % of sales

Total Variable Costs: 33 %

In this case, for every £1 you earn in sales costs you expend 33 pence in variable costs, leaving 67 pence as a contribution to cover fixed costs and profit – i.e. your gross margin is 67%.

Now suppose your fixed costs are as follows:

  • Finance costs £15,000
  • Establishments costs £50,000
  • General administration costs £15,000
  • Staff costs £70,000

Sub-Total £150,000

  • Less Local Promotion Reclaim   £4,000

Total Fixed Costs      £146,000

In order to cover your fixed costs exactly, and so break even, you must achieve sales of:  £146,000/67 pence = £217,910

A reduction in your profit margin can have a dramatic effect.

how to make a franchise business plan

 

 

 

 

 

 

 

 

 

 

 

Suppose that your Cost of Sales rises to 25%, so that for every £1 of sales you are incurring variable costs of 38 pence (Cost of Sales plus Franchise/Licence Fee and bad debts, as previously) and earning a contribution of only 62 pence. To break even now, you must achieve sales of:£146,000 /62 pence =£235,484 – an increase of £17,574 or 8 % in sales.

This kind of calculation can also highlight the effect of taking on extra costs. Assume again that you are earning a contribution of 67 pence for each £1 of sales, and that you are thinking of taking on a new staff member at a cost of £15,000 per year.

You must achieve sales of:£146,000 + £15,000/67 pence= £240,298 – an increase of £22,388 over the original level.

The break-even calculation for a school of English must therefore be viewed as a key performance indicator within the business and must be constantly monitored and assessed.

Managing cash

Apart from making a profit, the most visible sign of prosperity is a healthy bank account. But cash has a cost! An overdraft will cost interest. Money on deposit will earn interest. If there is a credit balance on your account, without earning interest, you are missing an opportunity to maximize your profits. If you don’t minimize your overdraft, by collecting debts and reducing stock levels, you will pay unnecessary interest.

Your aims should be to maximize the return on your money and reduce charges, and to know and plan your cash needs to avoid the need to arrange emergency short-term (and usually expensive) financing.

Forecasting

You should always monitor your monthly accounts and estimate your cash requirements over the next few months, knowing as you will your normal cash flow cycle. This cash flow forecast should include all sources of payments and receipts. It will allow you to calculate your monthly cash requirements over the short-term. You will therefore be able to control your cash flow and your international English franchise more effectively.

The cash flow forecast should be a formal exercise, which should receive careful consideration. It must be based on accurate historical information, and any future assumptions must be reasoned and honest. By adjusting forecasts regularly to take account of changes that have occurred you can spot future problems and opportunities and manage them. You will therefore be able to plan appropriate action to avoid putting unnecessary strain on your cash resources.

Management information

To make a franchise business plan, you will need as much accurate information as you can get in order to produce a realistic forecast. Therefore your own management accounts are a prime source of such information. In addition though you will need to have considered other aspects of your teaching franchise business such as:-

  • Sales (trends and fluctuations)
  • Your outstanding order book
  • The gross margin you are currently earning
  • Price changes in the pipeline from suppliers, landlords etc.
  • Bad debts being written off
  • Overheads – periodic payments due e.g. rates, rents etc.
  • Cash flow and bank balance
  • The length of your working capital cycle

Pingu’s English offers ongoing marketing and business development assistance to all its worldwide partners . As an international education franchisor, it also guides entrepreneurs interested to open a network of English school for kids in their country, to create a winning business plan.

If you want to open your exclusive franchise school for kids, contact opportunities@pingusenglish.com

Click here to Enquiry form so we can help you with your education franchise business plan.

Download our Franchise Brochure 2017

how to make a franchise business plan

 

 

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Testimonials

We at the British Chamber of Commerce worked with Linguaphone Group to find them a new in-market partner for the Korean market. Throughout the engagement we had with Linguaphone Group, we found them to be passionate about education, supremely professional in their approach to business and both responsive and personable in their interactions with ourselves and Korean partners. Korean investors were attracted to the best-in-class program which Linguaphone Group offers, the strong reputation of the company and the heritage with which it is associated. These are qualities that resonate globally.

British Chamber Korea

 Sean Blakeley, BCCK CEO

Our Experience with Pingu’s English has been profitable and positive from the first year. We relied on their professionalism and heritage, their staff is always prompt to assist with the latest trends and ideas on the market. We were looking for a brand who can guarantee us quality and a solid method but at the same time would leave us the freedom and flexibility in order to succeed in our challenging and competitive market like the Italian one. We built Pingu’s English project in Italy by mixing their huge international experience in the English training with our knowledge of the Italian market. All this enabled us to do the right decision for our winning investment. Today we have over 40 Pingu’s English centres and thousands of happy children learning English.

Daniele Arboit

Pingu's English Master Franchisee Italy

From our first training session in London 2009- from the academic side to customer service -we felt confident and well equipped with the necessary knowledge and skills to be successful Pingu’s English Master Licensees” At the moment, our services to all 23 networked schools across the country are effectively and efficiently backed by Pingu’s English.  No doubt that we see no limit to expand our business to cover 30,000+ schools in the near future!

Nipat Ungpakornkaew

Pingu's English Master Licensee Thailand

I knew about Pingu’s English School through a friend. After research about the school, I decided to enroll my daughter and it was one of the best things I could do to her. She loves studying at Pingu’s English and she cannot wait to the day of the class. I also love Pingu's English School, because there she learns by playing and I can see her progress day by day.

Léia Rodrigues

Pingu's English Student's mother / Brazil

Now she is studying at Pingu’s English School, my daughter only wants to talk to me in English and she is always singing the songs.

Cristiane Doimo

Pingu's English Student's mother /Brazil

Regarding the teaching method they use a figurative storytelling way of starting the lesson,  trying hard to involve the child and make the them curious about the situation. Tom is very happy to go to Pingu’s English because he perceives the School as a playful moment and not just as a learning moment while at the same time he is learning a new language

Veronica

Pingu's English Student's Mother /Italy

We love Pingu’s English School because the school gives my son the opportunity to learn and develop different skills, especially English skills. He is excited every time to go to school and is always happy when he comes home.

Sapavoot Preedawipart

Pingu's English Student's Mother/ Thailand

Pingu’s English School is not just a school; it is as a second home for my kid. I like it when I see my kid growing and learning in a friendly and safe atmosphere. Most of all, I can see a lot of improvement in his English listening and speaking skills

Piyatida Tudteam

Pingu's English Student's Mother/Thailand

I have being running my own school for 15 years. When I met Pingu’s English, it was love at first sight. Now I am offering the best English Course avaiable to my students and they are loving it as well as their parents. Thank you Pingu’s English!

Giedre Paula

Pingu’s English Unit Franchisee in State of Mato Grosso do Sul

Brazil is a huge Market and the preschool english education industry is growing very fast. All our franchisees are happy with the Pingu’s English methodology as well as the operational manuals Liguaphone offers to Unit Licensees. They feel very well assisted.

Ronaldo Vieira

Pingu's English Master Franchisee in State of Sao Paulo

Abbas always tells me that Pingu's English is the most fun he has all day. I am very glad that this place makes him feel that way and noticeably develop his language skills too

Ali

Pingu's English Student's Father/Bahrain

Our students are very enthusiastic in studying at Pingu’s English. They always tell us how much fun and how much they learn here. Parents also keep saying how proud they are with the knowledge and improvements their children are making.

Willian Veloso Rocha

Pingu’s English Unit Franchisee in State of São Paulo

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