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Franchising/Subway franchise


QUESTION: Mrs. Sarah

We are a group of 4 investors who wants to strart owning Subway franchise. I would like to know: 1) How much money minimum should we have to even start talking to the franchisor 2) Is this amount of money can also includ an amount of money from a line of credit? Or is this amount of money should be our money exclusively? In other words i would like to understand how should we be financialy prepared before going to the Subway franchise

Thank you

ANSWER: Claude,

Buying a franchise means you do not have to start from scratch.  You receive an established company’s name, and the right to see its products and services, in this case, the Subway franchise you and your partners are looking to invest in.  You would have to contact Subway head office and/or visit their website to read their specific qualification requirements regarding eligibility to own their franchise, however, I can give you some general guidelines, which are intended for information and guidance purposes only, and constitutes no guarantee, warranty or other representation of actual or expected financial results.

I don't know what the cost of owning a Subway is, you will have to contact them to find out what their qualifications are, but I can let you know that the cost of opening a location can vary depending on size, location and configuration of equipment installed, differences in construction costs and other factors. I would recommend that you have access to a minimum of $60,000 - $80,000 unencumbered cash, as a group, not including money from a line of credit.

I would also recommend you have a business plan in place showing a 3 and 5 year projection on how you think the business will look.  Remember, your actual earnings depends on a number of variables including: location, your personal ability to hire, train and motivate employees, the amount of time you will personally devote to your business and competitive factors.  Ultimately, however, you are staring a new business and there are business risks.  

I hope I have been able to answer your questions. Good luck in your future endeavors!

---------- FOLLOW-UP ----------

QUESTION: Mrs. Sarah

You have clearly answered my question but how can i make a business plan for a franchise if i do not have a information, datas coming from the franchisor.

If i am not already a franchisee, how can i make a business plan without the infos coming from Subway. There are some informations regarding the operations and costs that i can only get from the franchisor.
What is the process to do a business plan for a franchise if i not a franchisee yetÉ

Thank you very much

You can start putting together a standard template business plan and then once you receive the information you need from Subway you will be able to get a more specific business plan together.  I  can send you some template information on what you will need to put into your business plan.

Why is a business plan so vital to the health of your business?

The old adage goes: failure to plan is a plan for failure. Your business plan does not need to be complex or convoluted, but it is necessary, as a matter of fact mandatory. If you are having a hard time pulling your plan together, the following might be of some assistance.
A business plan is a written description of your business's future. That's all there is to it--a document that describes what you plan to do and how you plan to do it. If you jot down a paragraph on the back of an envelope describing your business strategy, you've written a plan, or at least the germ of a plan.
Business plans can help perform a number of tasks for those who write and read them. They're used by investment-seeking entrepreneurs to convey their vision to potential investors. They may also be used by firms that are trying to attract key employees, prospect for new business, deal with suppliers or simply to understand how to manage their companies better.
So what's included in a business plan, and how do you put one together? Simply stated, a business plan conveys your business goals, the strategies you'll use to meet them, potential problems that may confront your business and ways to solve them, the organizational structure of your business (including titles and responsibilities), and finally, the amount of capital required to finance your venture and keep it going until it breaks even.
Sound impressive? It can be, if put together properly. A good business plan follows generally accepted guidelines for both form and content. There are three primary parts to a business plan:
•   The first is the business concept, where you discuss the industry, your business structure, your particular product or service, and how you plan to make your business a success.
•   The second is the marketplace section, in which you describe and analyze potential customers: who and where they are, what makes them buy and so on. Here, you also describe the competition and how you'll position yourself to beat it.
•   Finally, the financial section contains your income and cash flow statement, balance sheet and other financial ratios, such as break-even analyses. This part may require help from your accountant and a good spreadsheet software program.

Breaking these three major sections down even further, a business plan consists of seven key components:
1.   Executive summary
2.   Business description
3.   Market strategies
4.   Competitive analysis
5.   Design and development plan
6.   Operations and management plan
7.   Financial factors
In addition to these sections, a business plan should also have a cover, title page and table of contents.
How Long Should Your Business Plan Be?
Depending on what you're using it for, a useful business plan can be any length, from a scrawl on the back of an envelope to, in the case of an especially detailed plan describing a complex enterprise, more than 100 pages. A typical business plan runs 15 to 20 pages, but there's room for wide variation from that norm.
Much will depend on the nature of your business. If you have a simple concept, you may be able to express it in very few words. On the other hand, if you're proposing a new kind of business or even a new industry, it may require quite a bit of explanation to get the message across.
The purpose of your plan also determines its length. If you want to use your plan to seek millions of dollars in seed capital to start a risky venture, you may have to do a lot of explaining and convincing. If you're just going to use your plan for internal purposes to manage an ongoing business, a much more abbreviated version should be fine.
About the only person who doesn't need a business plan is one who's not going into business. You don't need a plan to start a hobby or to moonlight from your regular job. But anybody beginning or extending a venture that will consume significant resources of money, energy or time, and that is expected to return a profit should take the time to draft some kind of plan.
•   Startups. The classic business plan writer is an entrepreneur seeking funds to help start a new venture. Many, many great companies had their starts on paper, in the form of a plan that was used to convince investors to put up the capital necessary to get them under way.  Most books on business planning seem to be aimed at these startup business owners. There's one good reason for that: As the least experienced of the potential plan writers, they're probably most appreciative of the guidance. However, it's a mistake to think that only cash-starved startups need business plans. Business owners find plans useful at all stages of their companies' existence, whether they're seeking financing or trying to figure out how to invest a surplus.
•   Established firms seeking help. Not all business plans are written by starry-eyed entrepreneurs. Many are written by and for companies that are long past the startup stage.  It helps make the new venture a winner long before the big day arrived.
These middle-stage enterprises may draft plans to help them find funding for growth just as the startups do, although the amounts they seek may be larger and the investors more willing. They may feel the need for a written plan to help manage an already rapidly growing business. Or a plan may be seen as a valuable tool to be used to convey the mission and prospects of the business to customers, suppliers or others.
Plan an Updating Checklist
Here are seven reasons to think about updating your business plan. If even just one applies to you, it's time for an update.
1.   A new financial period is about to begin. You may update your plan annually, quarterly or even monthly if your industry is a fast-changing one.
2.   You need financing, or additional financing. Lenders and other financiers need an updated plan to help them make financing decisions.
3.   There's been a significant market change. Shifting client tastes, consolidation trends among customers and altered regulatory climates can trigger a need for plan updates.
4.   Your firm develops or is about to develop a new product, technology, service or skill. If your business has changed a lot since you wrote your plan the first time around, it's time for an update.
5.   You have had a change in management. New managers should get fresh information about your business and your goals.
6.   Your company has crossed a threshold, such as moving out of your home office, crossing the $1 million sales mark or employing your 100th employee.
7.   Your old plan doesn't seem to reflect reality any more. Maybe you did a poor job last time; maybe things have just changed faster than you expected. But if your plan seems irrelevant, redo it.

Business plans tend to have a lot of elements in common, like cash flow projections and marketing plans. And many of them share certain objectives as well, such as raising money or persuading a partner to join the firm. But business plans are not all the same any more than all businesses are.
Depending on your business and what you intend to use your plan for, you may need a very different type of business plan from another entrepreneur. Plans differ widely in their length, their appearance, the detail of their contents, and the varying emphases they place on different aspects of the business.
The reason that plan selection is so important is that it has a powerful effect on the overall impact of your plan. You want your plan to present you and your business in the best, most accurate light. That's true no matter what you intend to use your plan for, whether it's destined for presentation at a venture capital conference, or will never leave your own office or be seen outside internal strategy sessions.
When you select clothing for an important occasion, odds are you try to pick items that will play up your best features. Think about your plan the same way. You want to reveal any positives that your business may have and make sure they receive due consideration.
Types of Plans
Business plans can be divided roughly into four separate types. There are very short plans, or miniplans. There are working plans, presentation plans and even electronic plans. They require very different amounts of labor and not always with proportionately different results. That is to say, a more elaborate plan is not guaranteed to be superior to an abbreviated one, depending on what you want to use it for.
•   The Miniplan. A miniplan may consist of 1 - 10 pages and should include at least cursory attention to such key matters as business concept, financing needs, marketing plan and financial statements, especially cash flow, income projection and balance sheet. It's a great way to quickly test a business concept or measure the interest of a potential partner or minor investor. It can also serve as a valuable prelude to a full-length plan later on.
Be careful about misusing a miniplan. It's not intended to substitute for a full-length plan. If you send a miniplan to an investor who's looking for a comprehensive one, you're only going to look foolish.

•   The Working Plan. A working plan is a tool to be used to operate your business.  It has to be long on detail but may be short on presentation. As with a miniplan, you can probably afford a somewhat higher degree of candor and informality when preparing a working plan.
A plan intended strictly for internal use may also omit some elements that would be important in one aimed at someone outside the firm. You probably don't need to include an appendix with resumes of key executives, for example. Nor would a working plan especially benefit from, say, product photos.
Fit and finish are liable to be quite different in a working plan. It's not essential that a working plan be printed on high-quality paper and enclosed in a fancy binder. An old three-ring binder with "Plan" scrawled across it with a felt-tip marker will serve quite well.
Internal consistency of facts and figures is just as crucial with a working plan as with one aimed at outsiders. You don't have to be as careful, however, about such things as typos in the text, perfectly conforming to business style, being consistent with date formats and so on. This document is like an old pair of khakis you wear into the office on Saturdays or that one ancient delivery truck that never seems to break down. It's there to be used, not admired.
•   The Presentation Plan. If you take a working plan, with its low stress on cosmetics and impression, and twist the knob to boost the amount of attention paid to its looks, you'll wind up with a presentation plan. This plan is suitable for showing to bankers, investors and others outside the company.
Almost all the information in a presentation plan is going to be the same as your working plan, although it may be styled somewhat differently. For instance, you should use standard business vocabulary, omitting the informal jargon, slang and shorthand that's so useful in the workplace and is appropriate in a working plan. Remember, these readers won't be familiar with your operation. Unlike the working plan, this plan isn't being used as a reminder but as an introduction.
You'll also have to include some added elements. Among investors' requirements for due diligence is information on all competitive threats and risks. Even if you consider some of only peripheral significance, you need to address these concerns by providing the information.
The big difference between the presentation and working plans is in the details of appearance and polish. A working plan may be run off on the office printer and stapled together at one corner. A presentation plan should be printed by a high-quality printer, probably using color. It must be bound expertly into a booklet that is durable and easy to read. It should include graphics such as charts, graphs, tables and illustrations.
It's essential that a presentation plan be accurate and internally consistent. A mistake here could be construed as a misrepresentation by an unsympathetic outsider. At best, it will make you look less than careful. If the plan's summary describes a need for $40,000 in financing, but the cash flow projection shows $50,000 in financing coming in during the first year, you might think, "Oops! Forgot to update that summary to show the new numbers." The investor you're asking to pony up the cash, however, is unlikely to be so charitable.
•   The Electronic Plan. The majority of business plans are composed on a computer of some kind, then printed out and presented in hard copy. But more and more business information that once was transferred between parties only on paper is now sent electronically. So you may find it appropriate to have an electronic version of your plan available. An electronic plan can be handy for presentations to a group using a computer-driven overhead projector, for example, or for satisfying the demands of a discriminating investor who wants to be able to delve deeply into the underpinnings of complex spreadsheets.

Glad I could help.  Good luck!


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sarah kulbatski


JT Corporation is a professional franchise consultation company, founded by myself in 2011. I am the director of JT Corporation and have a wealth of franchise development experience that spans over 17 years in the corporate world, and therefore can answer any questions relating to franchising.


As the source for all your franchise needs, JT Corporation provides professional services to increase sales and profitability of your business. JT Corporation creates aggressive business plans for both start-up and established franchise opportunities. Whether you are a mature or emerging franchisor, a solid foundation based on franchise relations is imperative. JT Corp will assist in all steps of growing your business and recruiting the best franchisees to join your system.

Graduated York University with a BA in Philosophy Successfully completed and obtained Law Clerk Degree at George Brown College

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