In your company analysis, you will detail the type of franchise you are operating.
For example, you might operate one of the following types:
- Business Format Franchise: This type of franchise is when the franchisor gives the rights to trademarks, trade names, business process and the system in order for the franchisee to sell the product, for a fee. The franchisor is heavily involved in terms of how the service is provided and the business is run.
- Product Distribution Franchise: This franchise concept is similar to a supplier-distributor relationship. The franchisor is responsible for providing the product and the distributor is then able to sell the product on. The main thing that is given by the franchisor is the product. With this type of franchise, the franchisee can be much more independent in terms of not having the restriction and guidelines that a business format franchise has. However, a product distribution franchisee still has to follow certain guidelines such as selling the products on an exclusive or a semi-exclusive basis. The franchisee has to pay fees for using the trademark name and trademarks and the products that they are wanting to sell.
- Management Franchise: This franchise focuses on the franchisee managing the franchise. The manager does not really need to take part in the day to day running of the business.
In addition to explaining the type of franchise you operate, the Company Analysis section of your business plan needs to provide background on the business.
Include answers to question such as:
- When and why did you start the business?
- What milestones have you achieved to date? Milestones could include sales goals you’ve reached, new store openings, etc.
- Your legal structure. Are you incorporated as an S-Corp? An LLC? A sole proprietorship? Explain your legal structure here.