FRANCHISING
PROPOSAL
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WHAT IS FRANCHISING PROPOSAL
DEFINITION
• A franchising proposal is a formal document
presented by a business (franchisor) to potential
franchisees, outlining the opportunity to open and
operate a franchise of the business. The proposal
provides detailed information about the franchise,
including its business model, operations, financial
requirements, and the benefits of becoming a
franchisee. It aims to persuade potential investors that
the franchise is a viable and profitable business
opportunity.
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PURPOSE OF A FRANCHISING
PROPOSAL:
The goal of a franchising proposal is to:
a. Attract potential franchisees by showcasing the
profitability and sustainability of the franchise.
b. Provide all necessary information for investors to make an
informed decision.
c. Establish a clear understanding of the franchise's
expectations, requirements, and support mechanisms.
By preparing a well-organized and persuasive franchising
proposal, businesses can expand through franchising while
ensuring that franchisees are well-informed and aligned with
the brand’s vision and goals.
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DIFFERENCES BETWEEN A FRANCHISING
PROPOSAL AND A TRADITIONAL BUSINESS PLAN.
PURPOSE:
• Franchising Proposal: A franchising Traditional Business Plan: A
proposal is designed to persuade
potential franchisees to invest in a business plan is primarily used to
franchise. It presents the franchising outline the strategy for starting,
opportunity, explains the benefits of growing, or managing a business. It
becoming a franchisee, and outlines
the terms and conditions of the serves as a roadmap for the business
franchise relationship. The goal is to owner or a document to attract
show that the business model is investors or lenders. It focuses on the
successful and that the franchisee company’s goals, target market,
will receive ongoing support to
ensure profitability. financial projections, and strategies
for achieving success. It is not focused
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on selling a franchising opportunity.
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DIFFERENCES BETWEEN A FRANCHISING
PROPOSAL AND A TRADITIONAL BUSINESS PLAN.
Audience
• Franchising Proposal: The Traditional Business Plan: The
audience is primarily
audience for a business plan is
potential franchisees who
are evaluating whether they usually investors, lenders, or
should invest in the franchise. internal management. It may
It is written to convince also be presented to partners,
individuals or businesses to employees, or other
buy into an established
business model and open a
stakeholders who are involved in
franchise location. the company’s operations.
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DIFFERENCES BETWEEN A FRANCHISING
PROPOSAL AND A TRADITIONAL BUSINESS PLAN.
Content Focus
• Franchising Proposal: The content Traditional Business Plan: A
is focused on the franchise system,
detailing the relationship between business plan is focused on the
the franchisor and the entire business and includes
franchisee. It includes information detailed sections on the business
about the franchise model, training
and support offered, franchise fees,
concept, product or service, market
royalties, and the level of investment analysis, marketing strategies,
required by franchisees. It often operational plans, and financial
emphasizes brand recognition, forecasts. It explains how the business
operational processes, and the
success of the existing franchise will start or grow, but it does not
network. specifically cover the franchising
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relationship.
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DIFFERENCES BETWEEN A FRANCHISING
PROPOSAL AND A TRADITIONAL BUSINESS PLAN.
Ownership and Control
• Franchising Proposal: The Traditional Business Plan: In a
proposal is aimed at individuals
who will operate a franchise
traditional business plan, the
under a franchisor's brand, business owner retains full
following strict guidelines set by control over how the business is
the franchisor. The franchisee run. The plan outlines how the
typically has less control over
owner or management will make
key business decisions, as the
franchisor dictates many aspects decisions regarding the business's
like branding, product offerings, direction, operations, and growth.
and operational standards.
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DIFFERENCES BETWEEN A FRANCHISING
PROPOSAL AND A TRADITIONAL BUSINESS PLAN.
Financial Projections
• Franchising Proposal: Financial Traditional Business Plan: A
information in a franchising
proposal usually includes initial traditional business plan will
franchise fees, royalties, and provide detailed financial
other ongoing payments that the projections for the business as a
franchisee will need to make to whole, such as sales forecasts,
the franchisor. It may also
provide examples of how much profit and loss statements, and
existing franchisees are earning, break-even analyses. It focuses on
giving potential franchisees an the overall profitability of the
idea of what they can expect. business without any reference to a
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DIFFERENCES BETWEEN A FRANCHISING
PROPOSAL AND A TRADITIONAL BUSINESS PLAN.
Support and Training
• Franchising Proposal: A
franchising proposal emphasizes
Traditional Business Plan: A
the support that the franchisor traditional business plan may
will provide to the franchisee, include sections about internal
including initial training,
marketing assistance, training and development for
operational guidance, and staff, but there is no external
ongoing support to ensure success.
It highlights the turnkey nature franchisor providing support. The
of a franchise business where most business owner is responsible for
of the systems are already
established by the franchisor.
building and maintaining the
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entire support structure for the
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DIFFERENCES BETWEEN A FRANCHISING
PROPOSAL AND A TRADITIONAL BUSINESS PLAN.
Legal and Contractual Considerations
• Franchising Proposal: A
franchising proposal emphasizes
Traditional Business Plan: A
the support that the franchisor traditional business plan may
will provide to the franchisee, include sections about internal
including initial training,
marketing assistance, training and development for
operational guidance, and staff, but there is no external
ongoing support to ensure success.
It highlights the turnkey nature franchisor providing support. The
of a franchise business where most business owner is responsible for
of the systems are already
established by the franchisor.
building and maintaining the
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entire support structure for the
COMPONENTS OF
A FRANCHISING
PROPOSAL
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WHAT IS MARKETING?
• Marketing is the process of continuously
and profitability satisfying target
customer’s needs, wants, and
expectations superior to the competition
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WHAT IS MARKET?
• In a business context, the term "market" refers
to the group of potential customers or
organizations that share a common need or
interest in a particular product or service. It
represents the demand side of the business
equation, encompassing individuals,
businesses, or other entities willing to purchase
goods or services to satisfy their specific needs
or wants.
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WHAT IS MARKET?
Market Definition for a Coffee Shop:
Target customers: Young professionals and students.
Geographical scope: A city’s business district or near a university.
Product category: Specialty coffee, pastries, and snacks.
Competitive set: Other nearby coffee shops, fast food chains with
coffee, and convenience stores offering grab-and-go coffee.
• In this case, the coffee shop defines its market as young
professionals and students who are likely to visit during work or
study breaks, in a specific location, and competing with other
businesses offering similar products.
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WHAT IS MARKET SIZE
• Market size is the total number of potential clients or buyers
in a particular market segment. It's helpful for an
organization or small business to determine its market size
before launching a new service or product to ensure it
reaches its expected audience.
• In various careers, such as marketing, sales, and business
consulting, such analysis is a critical part of business
planning, as many investors conduct market sizing analysis
before venturing into a new business. Knowing you've done
your research also helps these professionals understand
your goals and proposals.
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EXECUTIVE SUMMARY
• A brief overview of the business and the franchise
opportunity, highlighting the key selling points of the
franchise and why it is a good investment.
• (PUT DATA THAT WILL SUPPORT YOUR FRANCHISE AS
A GOOD BUSINESS OPPORTUNITY)
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COMPANY BACKGROUND
•A history of the business, its mission, vision,
values, and what makes it successful.
•Include key milestones and the reputation the
business has built over time.
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FRANCHISE CONCEPT
•A detailed description of the product or service
offered by the franchise.
•Explain the uniqueness of the brand and its
competitive edge in the market.
(USE 7 PS OF MARKETING)
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WHAT IS MARKETING MIX
DEFINITION
• The marketing mix is a strategic framework
that businesses use to develop and execute an
effective marketing plan. It consists of a set of
controllable variables that influence a
customer's buying decision. The traditional
marketing mix is known as the 4Ps (Product,
Price, Place, and Promotion), though in service
industries, it is often expanded to the 7Ps by
adding People, Process, and Physical Evidence.
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WHAT IS MARKETING MIX
DEFINITION
• The 4Ps of marketing—Product, Price, Place, and
Promotion—form the foundation of a marketing strategy.
Their purpose is to help businesses effectively bring their
products or services to market and meet customer needs.
• The 7Ps of marketing are an extended version of the
traditional 4Ps, commonly used in service-based
industries. In addition to Product, Price, Place, and
Promotion, the 7Ps include People, Process, and Physical
Evidence. These elements help businesses deliver value
and create a more holistic marketing approach.
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4P’S OF MARKETING
DEFINITION:
1. Product: Refers to the goods or services that a business offers to meet
customer needs or desires. It includes decisions related to product design,
quality, features, branding, packaging, and any variations or updates.
2. Price: The amount customers pay for the product. It involves pricing
strategies (e.g., cost-plus pricing, dynamic pricing), discounts, payment
methods, and overall perceived value. Price must balance customer
willingness to pay with profitability.
3. Place: The distribution channels through which the product or service is
made available to customers. This includes physical locations (stores,
outlets), online presence (e-commerce), logistics, and the supply chain to
ensure accessibility to the target market.
4. Promotion: The communication strategies used to inform and persuade
customers about the product's value. Promotion encompasses advertising,
21sales promotions, personal selling, public relations, and digital marketing
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7P’S OF MARKETING
DEFINITION:
5. People: The employees, sales staff, and customer service
personnel who interact with customers. In service industries, the
behavior, competence, and attitude of staff can significantly
influence customer satisfaction and experience.
6. Process: The systems and procedures involved in delivering a
product or service. This includes the workflow, efficiency, and
consistency of the customer experience, such as ordering
systems, delivery processes, and customer service protocols.
7. Physical Evidence: The tangible aspects that customers
encounter, which reinforce the quality or perception of the
product or service. This includes store layout, online interface,
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packaging, brochures, or even the physical environment where
the service is provided.
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FRANCHISE CONCEPT
USED 7PS OF MARKETING
Practical Example of a Coffee Shop Franchise
1. Product: High-quality coffee and baked goods made with ethically sourced
ingredients.
2. Price: Competitive pricing with premium offerings (e.g., organic or specialty drinks
at a higher price point).
3. Place: Prime locations near offices, universities, and malls; online ordering for
delivery.
4. Promotion: Loyalty programs, social media engagement, influencer partnerships,
and seasonal promotions.
5. People: Training programs for baristas and managers, ensuring consistent service
quality.
6. Process: Streamlined ordering system, efficient coffee preparation process, and fast
delivery times.
7. 23Physical Evidence: A modern, comfortable store design, branded cups and
napkins, and a clean, welcoming environment.
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MARKET ANALYSIS
•An analysis of the industry and target market,
showing that there is demand for the product
or service. (YOU CAN USE PEST ANALYSIS TO
IDENTIFY THAT THERE IS DEMAND ON YOUR
FRANCHISE THAT YOU WILL CHOOSE)
•Include trends, market size, and competitor
analysis.
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MARKET ANALYSIS
Introduction for market analysis
Define the Industry and Market
Identify the specific industry and the target market
segment relevant to your franchise.
• Example: For a coffee shop franchise, the industry is the
coffee shop and café industry. The target market
segment may include young professionals, students,
and health-conscious consumers.
Understand the scope of the market: regional, national,
or international.
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MARKET ANALYSIS
Introduction for market analysis
Gather Historical Data
Collect historical market data on the industry, including
sales data, consumer behaviors, industry reports, and
financial trends.
Sources:
• Industry reports from market research firms (e.g., IBISWorld,
Statista, Nielsen).
• Government data from national and regional statistics bureaus
(e.g., census data, economic surveys).
• Company data such as annual reports or franchise performance
metrics from similar businesses in the industry.
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TARGET MARKET
TARGET MARKET EXAMPLE
Gather Historical Data
Collect historical market data on the industry, including
sales data, consumer behaviors, industry reports, and
financial trends.
Sources:
• Industry reports from market research firms (e.g., IBISWorld,
Statista, Nielsen).
• Government data from national and regional statistics bureaus
(e.g., census data, economic surveys).
• Company data such as annual reports or franchise performance
metrics from similar businesses in the industry.
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MARKET SIZE
EXAMPLE
Census Data and Government Reports
Example: Using census data to estimate the number of people in
a specific age group or income bracket who are likely to be coffee
shop customers.
Industry Reports and Market Intelligence
Example: A report on the coffee shop industry may reveal that
the industry is growing at 5% annually, helping you estimate
future market size and growth potential.
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PEST ANALYSIS
• Incorporating a PEST analysis into a franchising
proposal equips potential franchisees with essential
insights into the external environment, enabling
them to make informed decisions. It helps
franchisees assess risks and opportunities, thereby
enhancing the overall attractiveness and credibility
of the franchise opportunity. By demonstrating
awareness of these external factors, franchisors can
build trust and confidence among prospective
franchisees.
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EXAMPLE
Political Factors
• Franchise Registration Requirements:
Compliance with registration processes can take
about 2 to 3 months. Understanding this timeline
is essential for franchisees to plan their business
launch effectively.
• The Philippines reduced its corporate tax rate from
30% to 25% under the Corporate Income Tax
and Incentives Reform Act (CITIRA). This
reduction benefits franchisees by increasing their
profit margins.
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EXAMPLE
ECONOMIC FACTORS
Inflation Rates:
The average inflation rate in the Philippines was 5.8% in
2022. Rising inflation can impact food and labor costs,
affecting the profitability of franchises. Franchisees must be
aware of how inflation trends could influence menu pricing.
Consumer Spending Trends:
• A 2023 survey indicated that 62% of Filipinos increased
their dining-out frequency post-pandemic. This trend
indicates a growing market for restaurant franchises like
Shakey's, where family and group dining is popular.
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EXAMPLE
Social Factors
Cultural Dining Preferences:
• The popularity of family dining experiences can be highlighted by the fact
that 77% of Filipino families prefer to dine out at least once a week.
Shakey's can leverage this preference with its family-sized meal offerings.
Changing Consumer Lifestyles:
• A shift towards convenience is reflected in the 40% increase in food delivery
service usage in 2022. Shakey's can tap into this trend by enhancing its
delivery options, appealing to busy families and individuals.
Health and Nutrition Awareness:
• A 2023 health survey found that 53% of Filipinos are actively seeking
healthier food options. Franchisees can attract health-conscious customers
by introducing salads, low-calorie meals, or gluten-free options alongside
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traditional offerings.
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EXAMPLE
Technological Factors
Digital Ordering and Delivery:
• The online food delivery market in the Philippines grew by 75% post-pandemic,
indicating a significant shift towards digital platforms. Shakey's has
implemented a robust online ordering system, essential for franchise success.
Payment Innovations:
• In 2022, 75% of Filipinos reported using cashless payment methods. Shakey's
franchisees can benefit from offering diverse payment options such as e-
wallets and credit cards, enhancing customer convenience.
Social Media Marketing:
• With 81% of Filipinos active on social media platforms, effective marketing
campaigns on platforms like Facebook and Instagram can enhance brand
visibility. Shakey's franchises can leverage social media to engage customers,
promote
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new offers, and increase foot traffic.
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MARKET ANALYSIS
COMPETITIVE PROFILE MATRIX
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