Franchise Development Plans: Realistic, Not Hopeful

A conversation with Ken Rostron, partner at The Franchise Company. Interview by Tony Johnston, FranchiseAir.

Ken Rostron has spent his career on both sides of the franchising fence. He started in the late 70s with Prontaprint in Newcastle, helping grow it from a handful of franchisees to an international group of close on 300, and floating the business in 1985. He relaunched the AlphaGraphics franchise in the UK for its master franchisor, rebranded a courier franchise for its venture-capital owners, and since 2001 has advised franchisors at The Franchise Company — one of the UK’s longest-established independent franchise consultancies — where he has been a partner since 2002.

We asked him about franchise development plans: what a plan is actually for, where the numbers in it should come from, and what to do when the plan meets reality. His answer keeps coming back to the foundation — get the first few franchisees right, and the plan gives you growth; get recruitment wrong, and the whole thing stalls.

From Prontaprint to The Franchise Company

Tony: Welcome — I’m Tony Johnston. I work for FranchiseAir.com, the authors of Franchise 360 and Jobs360 software. We’ve been working on software for franchises since 2005. Today I’m joined by Ken Rostron, who is a partner of The Franchise Company. So, Ken, today we’re going to talk about something you know a lot about — franchise development plans. But before we do that, could you just run us through who you are, what your history in franchising is?

Ken: Yes — delighted to do that. As you can probably tell from the grey hair, my background goes back a while. I started in the late 70s with Prontaprint in Newcastle, and was there till the early 90s. During that time we developed the business from a small number of franchisees to an international group with close on 300 franchisees worldwide, and in 1985 floated the business on what was then the USM. So that was really the UK franchising experience. Then I worked for a master franchise arrangement in the UK — a company called AlphaGraphics. They were looking to relaunch their franchise in the UK, and I did that — worked on that, which was interesting, actually working for the master franchisor. And then I did a similar job for a courier business called Fastrack, that had been operated for years and years by a well-known business in the Midlands operating as Captain Cargo. They’d been bought by venture capitalists and were looking to completely rebrand. Did that for a few years, and then was invited by Julie to join The Franchise Company, because her original partner was wanting to go off and operate his own business.

Tony: The Franchise Company is obviously still going. Can I just promote your web address — that’s thefranchisecompany.co.uk, isn’t it?

Ken: It is, yes.

Tony: And if anyone wants to talk to Ken, I’m sure he would welcome the conversation. So today what we’re going to do is just look at franchise development plans. We’re going to look at topics such as: what makes a growth plan realistic, what causes them to fail, where the numbers should come from, and how to monitor reality against a plan.

What a development plan is for

Tony: So my first question is: what is a development plan for, and what should it look like?

Ken: The development plan should be typically three to five years. So we would look at the recruitment performance in the first 36 months, and then extend that for a five-year period — it’s all a question of exactly how far do you go. However, the point of the development plan is to demonstrate to the franchisor how growing the network affects their income: because they go from five to ten or twenty franchisees, providing them with a monthly fee for training, for marketing and management support — and then you look at that income stream in three to five years’ time. And if you’ve got the recruitment process correct, and you’re recruiting, generally, the right profile of franchisee, that’s where the franchisor starts to see significant growth.

For example, one of my clients came to me with 10 or 12 franchisees paying, let’s say, £200 a month — and three to four years later we had just short of a hundred franchisees paying a couple of hundred pounds a month, let’s say. So that’s the nature. The growth plan would show how to recruit and grow the network effectively, but profitably — so that the business is viable, and it’s growing based on a strong foundation, in terms of the quality of your franchise network and the cash flow, when you bring on board a new franchisee and you’ve got the support programme and the training programme in place.

Start from a tried and tested business

Tony: So we’re going to start by assuming people do have a plan — I don’t know if that’s a good assumption, Ken — but let’s just have a look at what a development plan should actually concentrate on, beyond the kind of simple “how many franchisees we’d like” sort of thing.

Ken: I think the first stage has always got to be that the prospective franchisor has a tried and tested business plan. That’s really the mantra of franchising — that there is a tried and tested business plan that can be replicated, by training and by operating the tried and tested systems and marketing initiatives. And usually we’d look for a business model with at least 18 to 24 months’ track record if possible, so that there’s a strong base to work with. And then it’s a question of creating the financials, the training, and all the other support systems and monitoring that helps the franchisee to actually achieve the KPIs — the results that we’re looking for.

Tony: You mentioned that 18 to 24 months — why is that? I mean, it seems obvious, but why explicitly?

Ken: Because, I guess, first of all, the tried and tested element — that prospective franchisees have been asked to invest in a business model with a track record, where we can demonstrate results based on the training and marketing initiatives that I mentioned earlier.

The cost of recruiting the wrong people

Tony: Okay, that makes sense. So moving to the obvious next question: if franchisees are recruited who don’t understand the plan, don’t get what the franchise is about — what is the cost to a franchise when things start to go wrong with the plans?

Ken: Well, you’ve just identified really the key elements of success, in as much as the recruitment process needs to be robust, and it needs to show prospective franchisees exactly what it is they’re getting involved with, and how they have to operate the business on a day-to-day basis. And so if we flip that round — it’s because the recruitment process doesn’t do that that people are recruited into the franchise who are unsuitable.

Tony: And what would you say when that happens — what do you typically see happen to the franchise as a whole?

Ken: Usually the franchise stalls. Because not bringing on the right people — and having the right training and the right support structure in place, which is what a franchise is all about — is very disruptive. Disruptive to, clearly, the franchisee, but disruptive to the franchisor, because they end up spending their time firefighting and dealing with issues that should and could have been dealt with at an earlier stage, when the franchisee was on their induction training course. So the result is: the franchisor’s eye is taken off the ball, and they’re not concentrating on the positive elements of the business — recruiting franchisees, and helping franchisees to actually achieve the key performance indicators and other aspects of the business model that the franchisee’s invested in.

What should be in the plan — and the red flags

Tony: Okay. Looking in more detail at the actual plan — what would you expect to see in there, and what things do you see that are often missing that should be in there?

Ken: We would expect to see a business plan — doesn’t have to be War and Peace — but there should be a 24-month cash flow forecast; what we would refer to really as an operating statement, which is essentially income and expenditure excluding drawings, depreciation and loan repayments. We would expect to see that, and we would expect to see the support programme in place, from induction training — which can often take four to six weeks. Because that training needs to include, clearly, the theory of operating the business; the reporting systems for the franchise, so that they can monitor the business; and also being able to show that they have the capability to develop the business. So it’s not just the theory, it’s the practical as well. They have to demonstrate that they can operate the business on a day-to-day basis, usually by being involved for however long it takes — a week or two or more — with the franchisor’s company-owned business. That’s usually where the practical training should take place. And when the franchisee leaves, they should feel comfortable taking over the business — and the franchisor should be comfortable letting them.

Tony: And do you see anything that’s typically missing, or is a red flag to you, when you think: this business plan doesn’t include X, Y or Z?

Ken: I guess the first red flag is always being able to demonstrate actual sales performance in relation to the sales forecast. So we don’t want to see sales figures inflated to arrive at the bottom line that’ll help to sell the franchise. That can happen. One slightly understandable problem is when someone’s invested in a franchise model — then, clearly, we understand they’re very anxious to see a return on their investment, and the consultancy fees and the lawyer’s fees and various other things. But they mustn’t get sucked into selling the franchise, or allowing someone to buy it, if they’re not suitable. And “not suitable” can come from a variety of methods. The franchisor should have a clear profile — nothing complicated, but still a profile — of the skill set, or the mindset, or the personality that’s needed to make the business a success. Because if you were running an accountancy firm, that’s completely different to running a bar, or something in the hospitality business, where personality counts for a lot more than exams passed and things like that.

The pressure to recruit

Tony: And as a consultant — and now obviously somebody who’s worked with a franchise itself — how do you handle that tension between the desire to recruit, to get money in, to get things going, against sensible business decisions: well, perhaps we shouldn’t be recruiting?

Ken: Yes — by really coming back to your last point, and explaining the disruption. Usually in the first year or two we can be, and usually are, closely involved with the franchisor, and so we would try very hard to dissuade them from taking on anyone who wasn’t suitable. And usually we succeed. But clearly there’s always one or two that could get through — especially once we’ve departed, if you like, and the client wants to get on operating the business and recruiting franchisees themselves.

Where the numbers come from

Tony: So again, turning to the franchisor’s business plan. We’ve talked about revenue — it should be realistic, and perhaps come from their own performance. How do other numbers appear in the plan? Things like the rate of recruitment, the likely growth of a franchise, that sort of thing — where do you get those numbers from?

Ken: They come really from the first, I would have said, two to three years, because that’s where the franchisor is building his foundation. And I know it sounds easy to say it’s got to be good — but the truth is, like any business, if the foundations are right in the first place, it isn’t a case of the rest will move easily; but what it can do is move quickly, if the resources are there for the franchisor. So to begin with, to ensure that foundation’s sound: I would expect, as I’ve mentioned, the induction training to be right. I would expect the initial support — the hands-on support when the franchisee’s actually operating the business — I would expect that, in the first three months, to be whatever it needed to make sure the franchisee feels comfortable and confident doing what they’re doing on a day-to-day basis, and feels that they’ve made the right decision, and that they can look forward to the next two or three years.

Because those first few franchisees become actually very, very effective when it comes to either testimonials, or when it comes to speaking to other prospective franchisees. So getting that base right in the first two or three years — whether it’s two or three, or five or ten franchisees — is really important. And then from there you can begin to kick on, and develop the business more quickly, if that’s what you want to do. But then you need the resources, as the franchisees come on board, to support them and make sure that you’re all going in the same direction.

When the numbers don’t add up

Tony: A couple of linked questions. The first would be: what happens if you sit down with your spreadsheet and you do some numbers and planning, and you find it doesn’t really work without you taking a lot of risk? Obviously as a franchisor this is a big, risky moment for you — you’re putting your model out there, but also you’re likely going to have money on the line: lawyers, accountants, etcetera. What should a prospective franchisor do if the numbers don’t really seem to add up? What do you typically advise there?

Ken: Do you mean franchisee or franchisor?

Tony: The franchisor — so the franchisor’s looking at the cost of the whole franchising.

Ken: Right, sorry. Well, first of all — having said what I have about the franchisee, I think the same would apply to the prospective franchisor. I have had one or two examples — and I can think of one in particular — where the business model was perfect, but the franchisor, as would have been, was so autocratic it just would never have worked. He’d have had problems from day one, and so that one didn’t go ahead. But in the main, it really is a case of making sure that everything’s in place to support the network — because that’s where the value is in the franchisor business model: in having, typically, a five-year franchise agreement in place with 10, 20, 50, 100 franchisees, all contracted — subject to various performances on both sides — to paying a fee on a monthly basis for marketing and management support.

And when the franchisor is going through that growth period — often referred to as scaling now — they need to make sure that the income generated from the franchise sales process leaves a surplus, to be able to support the training and the hands-on support that you’re providing. So if you were looking to recruit, whether it was 10 or 20 franchisees, the income from the franchise start-up package should really cover all of the cost of supporting those franchisees, rather than dipping into the management fee. It never works out perfectly, does it — but that’s what enables the budget for the franchisor, to make sure that new franchisees are getting the support that they need.

When the plan meets reality

Tony: Right. So my second question really was, I guess, plan meeting reality — in that we’ve all seen great business plans that do or don’t work. Firstly, what are the warning signs when a plan is perhaps not going as it should, and secondly, what can you do about that?

Ken: Yes — and of course that depends on which part of the plan isn’t working. If it’s recruitment, it could be funds available to advertise. It could be franchisees not actually achieving the forecasts. There’s a number of things. But usually — and I’m sure you would agree — within most businesses, problems can be remedied. A moment ago I was talking about the franchisor having enough people, the right staff levels, to help new franchisees. If a franchisee is struggling, then that should be identified early, and remedies put in. If the franchisees are doing well, then you want them to do more of what’s working — but at the same time, nothing ever works perfectly, and it doesn’t mean that they couldn’t do better without a little bit of extra help in one or two areas.

But I think it’s where the key performance indicators of the individual franchise models come into play. Having everyone use the same systems — it’s one of the benefits of a franchise — and now, more often than not, the same accounting system, enables the franchisor to monitor the overall performance much more effectively. If a franchisee is not hitting a cost of sale, it could be that he’s wasteful; it could be that he’s not charging enough at the top. Because the business model has been shown to be capable of being replicated when the franchise model was created, it should make it easy for the franchisor to identify what’s going wrong, and deal directly with the franchisee.

Tony: Is that a common problem — I guess that the franchisor doesn’t necessarily see this happening, and perhaps ignores the issue?

Ken: I wouldn’t say that it was common, but clearly it must happen. Either the franchisor hasn’t got the experience or the ability to deal with it — and if they’re not careful, it can drift from being a problem to confrontational.

Two expensive mistakes

Tony: Okay — I’m heading towards the end of our chat, so I thought we’d end with a kind of, I suppose, a fun one. Can you think of expensive or interesting mistakes that you’ve seen, where things have gone wrong when a franchisor is planning their franchise?

Ken: Yes — I can think of two or three, but quickly, I’ll give you two. The first one was a very small and relatively new franchise that had got to about 10 or 12, and the franchisor had allowed the consultant to choose which franchisees were coming on board. So the consultant dealt with all of the recruitment, said to the franchisor, “Joe Smith’s a good franchisee — here you are, off you go.” And after about a year, 18 months, it literally fell apart, and he was left with one. Simply because — and it was genuine — he wasn’t involved in the recruitment process.

But then another — I guess I could use the word spectacular, and definitely won’t name them — was a franchisor who was absolutely flying. Great reputation, everything looked perfect. And the business, unfortunately, collapsed. It was because the franchisor, in order to support the recruitment of new franchisees — which was absolutely flying — they took on the lease, which is a contingent liability. And of course, when there was a tough time in the marketplace, both here and in America, the franchisees struggled — and not only were they not paying their percentages, or not all of it, but they couldn’t afford to pay the rent, and the franchisor had to wind the business up.

Tony: And that’s a planning failure at the end of the day, isn’t it?

Ken: Well — it was a surprising one, because they were aware, but they took the risk, and it backfired. But then it backfired not just for them, but for the franchisees as well.

Tony: Yes — exactly, exactly.

Tony: Right. Well, that’s been a great walk through, I think, franchise development plans and the topic of how to plan out your franchise. If you want to do more of that with Ken directly — as I say, the website is thefranchisecompany.co.uk, and as I said before, I’m sure Ken would be delighted to have a conversation with you. So thank you, Ken.

Ken: Thank you.

Recorded over Microsoft Teams on 6 August 2026. Transcript lightly edited for clarity.

Ken Rostron is a partner at The Franchise Company, one of the UK's longest-established independent franchise consultancies, where he has advised franchisors since 2001. Before consultancy he held board-level roles at three franchisor plcs — growing Prontaprint to close on 300 franchisees worldwide and floating it in 1985, relaunching the AlphaGraphics franchise in the UK, and rebranding a national courier franchise.

Related reading: our conversation with Clive Smith on franchise recruitment · why franchise networks stall as they grow · real-time data for franchise decisions