How to Write a Franchise Business Plan for an SBA Loan
A franchise comes with a brand, an operating system and a playbook. It is tempting to assume the franchisor’s materials can serve as your business plan. They cannot. Lenders want to see your plan: your location, your market, your budget, your team and your projections.
The good news is that a franchise business plan for an SBA loan does not need to be long or elaborate. It needs to be specific, realistic and consistent with your financing request. This guide provides a section-by-section outline, with notes on what lenders typically look for in each part.
For a broader list of what lenders review beyond the business plan, see our guide to franchise loan requirements.
What Makes a Franchise Business Plan Different
Compared with a plan for an independent business, a franchise plan:
- Relies on the Franchise Disclosure Document for costs, fees and system information
- Must include royalties, advertising contributions and other franchise fees in projections
- Should explain how franchisor training and support reduce risk
- Still needs local market analysis, because the brand does not guarantee demand in your area
Section 1: Executive Summary
A one-page overview of the project.
- The brand and the type of business
- The location, or target area if the site is not final
- Total project cost, your equity contribution and the loan amount requested
- A short description of your background and why you are qualified
What lenders look for: A clear request with numbers that match the rest of the plan.
Section 2: The Franchise
- A description of the brand, products or services
- How long the franchisor has been franchising and the size of the system
- Training and ongoing support you will receive
- Key terms of the franchise agreement, such as term and territory
What lenders look for: Evidence you understand the franchise system and its obligations, and confirmation of the brand’s SBA eligibility. See our guide to the SBA Franchise Directory.
Section 3: Ownership and Management
- Owners, ownership percentages and roles
- Resumes and relevant experience
- Who will manage daily operations
- Planned staffing
What lenders look for: Management capability. If you will not run the business day to day, explain the management structure. Our guide to semi-absentee franchise financing covers manager-run plans.
Section 4: Market Analysis
- Your target customers and trade area
- Direct and indirect competitors, including other units of the same brand nearby
- Why this location can attract customers
- Local factors that may affect sales
What lenders look for: Local, specific research rather than national industry statistics. Visiting competitors and describing what you saw is more useful than general claims.
Section 5: Location and Lease
- Site description, size and visibility
- Lease terms or purchase terms
- Build-out scope and timeline
- Franchisor site approval status
What lenders look for: A lease or ownership term that supports the loan term. If you are buying property, see franchise real estate financing.
Section 6: Marketing Plan
- How the brand’s national or regional marketing supports you
- Local marketing activities and budget
- Grand opening plan
What lenders look for: A local plan and a budget that appears in your projections.
Section 7: Sources and Uses of Funds
A table showing the total project cost by category and how each will be funded. Typical categories include:
- Initial franchise fee
- Leasehold improvements or construction
- Equipment and signage
- Opening inventory and supplies
- Pre-opening expenses, including training and hiring
- Working capital
- Professional fees and deposits
Start with the franchisor’s estimate in Item 7 of the disclosure document, then update it with local quotes. Our guide to how lenders read a Franchise Disclosure Document explains how Item 7 is used.
What lenders look for: Numbers supported by quotes, and working capital that is adequate for ramp-up.
Section 8: Financial Projections
Most lenders want monthly projections for the first year and annual projections for the following years. Include:
- Projected sales with clearly stated assumptions
- Cost of goods sold
- Labor, including a manager if applicable
- Occupancy costs
- Royalties, advertising fund contributions and all other franchise fees
- Other operating expenses
- Loan payments
- Owner compensation
Also include a break-even analysis and a short explanation of how you built your sales assumptions: financial performance information in the disclosure document, conversations with franchisees, and local research.
Use our SBA Loan Calculator to estimate loan payments for your projections.
What lenders look for: Conservative, well-explained assumptions and enough cash flow to cover all expenses, owner compensation and debt payments with a margin.
Section 9: Risks and Mitigation
- Key risks, such as slower ramp-up, cost overruns or staffing challenges
- How you will respond to each
- Personal reserves available
What lenders look for: Realism. Acknowledging risks and having a plan builds credibility.
Section 10: Supporting Documents
- Resumes
- Personal financial statements
- Franchise agreement or disclosure document excerpts
- Lease or letter of intent
- Contractor and equipment quotes
Plans for Buying an Existing Franchise
If you are buying an operating unit, your plan should focus on the unit’s historical results, your transition plan and any changes you intend to make. Under SBA’s updated rules for loans receiving a loan number on or after October 1, 2026, expect lenders to focus closely on the unit’s actual track record, so projections support the story but do not replace it. See SBA franchise loan changes for 2026 and our guide to franchise acquisition loans.
Common Business Plan Mistakes
- Copying franchisor marketing material instead of writing your own plan
- Leaving franchise fees out of projections
- Using national statistics instead of local research
- Projecting immediate full sales with no ramp-up
- Numbers that do not match between sections
Frequently Asked Questions
Do I need a business plan for an SBA franchise loan?
Lenders commonly request a business plan and projections, particularly for new franchise locations.
Can I use the franchisor’s business plan template?
Some franchisors provide templates or data that can help, but your plan should reflect your own market, costs and team.
How long should a franchise business plan be?
Long enough to answer the lender’s questions clearly. Specific, realistic content matters more than page count.
What is the most important part of the plan for lenders?
The financial projections and sources and uses of funds are central, supported by your experience and market research.
Final Thoughts
A strong franchise business plan for an SBA loan combines the franchisor’s system with your own local research, realistic costs and conservative projections. It shows a lender that you understand both the brand and the business you are about to run.
US Professional Funding provides franchise start-up financing, including SBA loans for franchise locations. We can review how your plan and financing request fit together.
