How to Write a Franchise Business Proposal


by Ian Lauder | Aug 17, 2012


There are many types of business franchises available for sale today: health foods, fitness clubs, pet stores, automotive parts or services, cleaning companies, fast-food, you name it.

At any time, there are franchisors--the overall owners who set up the branding and rules for a franchise business--wanting to sell individual franchises and expand their network.

On the other side of the equation, there are local entrepreneurs who want to become franchisees by purchasing a business from the original franchise company or from an existing franchisee/owner.

Whether you are the franchisor, an existing franchisee wanting to sell your franchise business, or a new potential franchisee wanting to buy a franchise, you need to find the best way to describe what you have to offer and what you propose to do. That means that you need to write a business proposal to buy or sell a franchise.

Writing a business proposal for a franchise should not be a daunting prospect. No matter which side of the franchise equation you are on, you must show that you understand what is expected from both parties, explain your plan and all its associated details, and persuade the other party that you can be trusted to carry out your part of the bargain. This is true in any business deal; some transactions are simply more complex than others.

All business proposals have a basic structure: introduction, then a needs/requirements section, followed by a description of what you are offering, and then a section at the end to persuade the reader that you can fulfill your promises.

First, you need to introduce yourself and your proposal. To do that, you'll write a Cover Letter that briefly explains who you are, states your goal, and provides all your contact information. Then, you'll create a Title Page to name your proposal something descriptive, like "Proposal to Sell the QRS Automotive Franchise at 100 Main Street" or "Health Club Franchise Opportunity in Maple Falls" or "Proposed Purchase of Hi-5 Hamburgers Franchise in Cedro Valley."

Next is the section where you spell out the needs and requirements of the deal. If you are selling a franchise, you'll need to specify the Requirements for purchase, which will contain descriptions such as a minimum cash investment, and perhaps a minimum net worth. You'll also want to specify a Fee Schedule or Cost Summary specifying the ongoing fees that the franchisee will need to pay to the franchisor--these might include fees for advertising or marketing, percentages of royalties, and so forth. You'll also need some topics that spell out what the franchisee is required to do. These might include pages like Expectations, Maintenance, Purchasing, Regulations, and Reporting. You might need Facilities, Design, Layout, or Uniforms that describe what the franchise and its products and employees must look like at all times. Topics will vary somewhat in this section, depending on the nature of the franchise. For a fast-food franchise, you might need a Menu page to spell out all i
tems that must be offered; for a cleaning franchise, you might need a Services Offered page to describe the services that must be offered. Include all the topics you need to describe what is required of an owner of the franchise.

In the following section, you need to describe precisely what you are offering the other party. If you are the franchisor or a current franchisee, you will most likely include pages like Return on Investment or Projected Income to show what a new franchisee can expect to earn. Training and Advertising are usually big components offered by a franchise, as well as having an established Market Share and Customers and recognizable Branding. Usually there is an established line of Products and a standard Process for running the business, steps for every Procedure, and so forth--be sure to include everything the franchise offers to help the new owner be a success. If you're selling an existing franchise, you might want to list your Staff or Team Members to let the prospective owner that these employees are available to stay with the business.

If you are seeking to purchase a franchise, you need to demonstrate that you can meet all the requirements for owning the franchise. You are offering your expertise, management skills, and funding to purchase and maintain the franchise. So in this section, you need to show that you have the necessary monies by including pages like Funding, Budget, and Investment. You also need to prove you have the necessary skills to make the business a success, so you may need pages like Education, Certifications, Experience, Management, Skills, or even a Resume. If you are bringing a management team to the franchise, you might need a Personnel page to show off the talents of your team.

In the final section, it's time to persuade the proposal reader that you are trustworthy and can carry out the promises you have made. So if you have Testimonials, Awards, Referrals, or a list of Supporters, put them in this section. If you are selling the franchise and offer a Guarantee or Warranty of any kind, add that, too.

That's it for writing the proposal. But spend a little time proofreading it and making it look good, too. You want your proposal to appear as professional as possible. If your proposal contains a lot of sloppy mistakes, the other party may assume you are just as careless in your business practices. It might be beneficial to hire a professional editor or proofreader to make a final pass.

There also may be additional legal requirements that must be adhered to when buying or selling a franchise. Legal issues are beyond the scope of this article. Make sure to consult your own attorney to ensure you are in compliance with all applicable laws.

Package up your proposal and send it via email as a PDF, or print it and deliver it in person or via a mail or delivery service. And be sure to follow up within a few days just to make sure it arrived and check to see if the recipient has questions.

You might like to know that you don't have to start with a blank word processing screen. A package like a proposal kit, which contains hundreds of topic templates and completed sample proposals, can make writing, formatting, and assembling business proposals much easier. Templates in a proposal kit will include instructions and suggestions for what to include on that page, so starting with those can make your writing more efficient and thorough. Make sure your proposal kit includes sample franchise proposals that deal with both buying and selling franchises. These samples will inspire ideas for what to include your own proposal.

About Ian Lauder

CIan Lauder has been helping small businesses and freelancers write their proposals and contracts for over a decade. => For more tips and best practices when writing your business proposals and legal contracts visit http://www.proposalkit.com

 

About Chia-Li Chien

Chia-Li Chien Chia-Li Chien, CFP®, CRPC, PMP; Chia-Li “like JOLLY!” Succession Strategies for Women Entrepreneurs. She is Chief Strategist of Value Growth Institute dedicated to helping private business owners increase the value of their firms. She is the award-winning author of Show Me The Money and faculty member of American Management Association. Her blog and newsletter was named a top small business resource by the New York Times “You’re the Boss” blog.
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