diff --git a/packages/cli/src/lib/new/factories/backendModule.test.ts b/packages/cli/src/lib/new/factories/backendModule.test.ts
new file mode 100644
index 0000000000..c633b1c1b2
--- /dev/null
+++ b/packages/cli/src/lib/new/factories/backendModule.test.ts
@@ -0,0 +1,121 @@
+/*
+ * Copyright 2021 The Backstage Authors
+ *
+ * Licensed under the Apache License, Version 2.0 (the "License");
+ * you may not use this file except in compliance with the License.
+ * You may obtain a copy of the License at
+ *
+ *     http://www.apache.org/licenses/LICENSE-2.0
+ *
+ * Unless required by applicable law or agreed to in writing, software
+ * distributed under the License is distributed on an "AS IS" BASIS,
+ * WITHOUT WARRANTIES OR CONDITIONS OF ANY KIND, either express or implied.
+ * See the License for the specific language governing permissions and
+ * limitations under the License.
+ */
+
+import fs from 'fs-extra';
+import mockFs from 'mock-fs';
+import { sep, resolve as resolvePath } from 'path';
+import { paths } from '../../paths';
+import { Task } from '../../tasks';
+import { FactoryRegistry } from '../FactoryRegistry';
+import { createMockOutputStream, mockPaths } from './common/testUtils';
+import { backendModule } from './backendModule';
+
+describe('backendModule factory', () => {
+  beforeEach(() => {
+    mockPaths({
+      targetRoot: '/root',
+    });
+  });
+
+  afterEach(() => {
+    mockFs.restore();
+    jest.resetAllMocks();
+  });
+
+  it('should create a backend plugin', async () => {
+    mockFs({
+      '/root': {
+        packages: {
+          backend: {
+            'package.json': JSON.stringify({}),
+          },
+        },
+        plugins: mockFs.directory(),
+      },
+      [paths.resolveOwn('templates')]: mockFs.load(
+        paths.resolveOwn('templates'),
+      ),
+    });
+
+    const options = await FactoryRegistry.populateOptions(backendModule, {
+      id: 'test',
+      moduleId: 'tester-two',
+    });
+
+    let modified = false;
+
+    const [output, mockStream] = createMockOutputStream();
+    jest.spyOn(process, 'stderr', 'get').mockReturnValue(mockStream);
+    jest.spyOn(Task, 'forCommand').mockResolvedValue();
+
+    await backendModule.create(options, {
+      private: true,
+      isMonoRepo: true,
+      defaultVersion: '1.0.0',
+      markAsModified: () => {
+        modified = true;
+      },
+      createTemporaryDirectory: () => fs.mkdtemp('test'),
+    });
+
+    expect(modified).toBe(true);
+
+    expect(output).toEqual([
+      '',
+      'Creating backend module backstage-plugin-test-backend-module-tester-two',
+      'Checking Prerequisites:',
+      `availability  plugins${sep}test-backend-module-tester-two`,
+      'creating      temp dir',
+      'Executing Template:',
+      'copying       .eslintrc.js',
+      'templating    README.md.hbs',
+      'templating    package.json.hbs',
+      'templating    index.ts.hbs',
+      'templating    module.ts.hbs',
+      'Installing:',
+      `moving        plugins${sep}test-backend-module-tester-two`,
+      'backend       adding dependency',
+    ]);
+
+    await expect(
+      fs.readJson('/root/packages/backend/package.json'),
+    ).resolves.toEqual({
+      dependencies: {
+        'backstage-plugin-test-backend-module-tester-two': '^1.0.0',
+      },
+    });
+    const moduleFile = await fs.readFile(
+      '/root/plugins/test-backend-module-tester-two/src/module.ts',
+      'utf-8',
+    );
+
+    expect(moduleFile).toContain(
+      `const testModuleTesterTwo = createBackendModule({`,
+    );
+    expect(moduleFile).toContain(`pluginId: 'test',`);
+    expect(moduleFile).toContain(`moduleId: 'tester-two',`);
+
+    expect(Task.forCommand).toHaveBeenCalledTimes(2);
+    expect(Task.forCommand).toHaveBeenCalledWith('yarn install', {
+      cwd: resolvePath('/root/plugins/test-backend-module-tester-two'),
+      optional: true,
+    });
+    expect(Task.forCommand).toHaveBeenCalledWith('yarn lint --fix', {
+      cwd: resolvePath('/root/plugins/test-backend-module-tester-two'),
+      optional: true,
+    });
+  });
+});