Are You A Franchisee Looking For a Franchise Finance Loan . Here’s Franchising Capital 101!

How To Finance A Franchise


OVERVIEW – Information to franchising finance in Canada . Here’s what a franchisee needs to know to be successful in getting a franchise finance loan for his or her new business opportunity




Isn't the scary

part of getting a proper franchise finance loan in place the fact that you've already spent a ton of time, and probably some money in addressing your project? That of course means you have probably covered off already key issues such as researching franchise trends, choosing the franchisor with which you wish to become aligned with, checking out industry trends and competition... and on it goes.

So with all that good staff work behind you it must seem daunting to know that getting franchising financing might still be your biggest obstacle. Not necessarily though, so let's discuss.

If you are focused and can address 4 or 5 issues surrounding your potential purchase and financing you are going to have a lot less of a challenge than you think.

The first key issues is that of ownership equity, aka the proverbial ' down payment '. Every client we talk to seems to want to know the minimum amount of capital they can put into the transaction. Surprisingly though we even see the other extreme where some business entrepreneurs are prepared to risk it all and pay cash for their franchise - often collapsing savings or taking mortgages on their homes.

So our key point on that issue - if we had to summarize we would say that somewhere between a low down payment and a 100% cash purchase is probably what you want to be focusing on. You're never going to be successful with 100% debt, and the reality is that no financing is in fact available on the ' OPM ' concept - i.e. 100% other peoples money! Over the years we met franchisees who have told a sad tale of losing it all, personally, after their business failed and they had pledged all personal assets.

We would add that the Canadian govt business loan, aka the BIL/CSBF program requires that you provide only a limited guarantee of 25% of your entire borrowings. That as well as good rates and flexible terms make it a prime candidate to research when you are looking for a financing facility for your transaction.

Another key issue that we always focus on is the concept of doing a bit more planning around how financing will work after you have closed your transaction. So a proper business plan and cash flow that you'll need should also stay focused on how the business will address wages, how much salary you will draw, covering the franchise royalty fees in your agreement with your franchisor. Typical royalty fees we see seem to be in the 6-8% range, sometimes more, and can take a significant chunk of your profits and cash flow.

One of the ways that you can address on going working capital, other than wrestling with your spreadsheets.. is to discuss carefully with the franchisor and other current franchisees as to the ongoing capital and expansion requirements of your business.

Many business owners start with modest drawing of salaries when they start a business. A franchise scenario, at the end of the day is still a start up. Yes, its a proven business model with a good chance of guaranteed revenues, but at the end of the day its as close to a start up as you can get, so budget accordingly for your personal needs relatives to a salary, living expenses, etc.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in addressing the key issues of franchise finance success in Canada.

Stan Prokop - founder of 7 Park Avenue Financial –

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/franchise-finance-loan-franchising-franchisee.html



7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653

Email = sprokop@7parkavenuefinancial.com

















Stan Prokop