How To Finance A Franchise In Canada
Franchise loans in Canada. Either not getting the one you want or need just might be a disaster when it comes to your entrepreneurial dream for a franchise purchase which all of a sudden appears to have gone up in smoke!
When all of your plans for a small business loan go awry when it comes to your franchisee financing loan almost everything is at risk, including your planning, potential franchisee fees or down payments you have made, deposits on a premises, etc. Let's examine some key elements of Canadian franchise finance success.
KEY ELEMENTS OF FRANCHISE FINANCING SUCCESS
Financing success in the franchise industry will come from both you and one or a combination of several franchising lenders. A common belief which we can dispel pretty quickly for you is that your franchisor is not going to be the one that plays a major role in the financing of your business - We guess you can say they are with your morally and spiritually, but not financially! Any form of assistance your franchisor might provide will typically be indirect in nature, sometimes in the form of a referral to a lending institution or a Canadian business financing advisor.
OWNER CONTRIBUTION PLUS EXTERNAL FINANCING
All businesses require start-up capital from the owners, so don't think that franchising in Canada is any different. That is your owner contribution when it comes to financing the key elements of your new business - items such as construction, leaseholds, equipment, the franchise fee, opening inventory, and potentially even real estate. Franchise owners should have a clear idea of funding both the purchase as well as day to day working capital needs to run and grow the business.
DON'T MAKE THE MISTAKE OF NOT PLANNING PROPERLY!
Right about here is where many franchises make a huge mistake. And that mistake? It's not focusing or planning for working capital for items such as salaries, wages, lease and loan payments, franchise royalties, etc. When working with clients we are always focusing on the ' working capital ' component of your business plan, not just the start-up financing, which often seems to be the sole focus of the franchisee. Ensure you have a solid business plan and executive summary and cash flow projection package. At 7 Park Avenue Financial, we prepare business plans that demonstrate your ability to make franchising a success.
It's important that franchisees demonstrate a good personal credit score and work history and experience as lenders rely on that as part of the franchise formula for long term success.
THE FUTURE IS UNLIMITED!
We could even take that one step further and say that you might want to even start considering at this point an expansion plan if you choose, down the road, to acquire multiple franchise locations, in the same or another industry. Franchise financing options get better with more success in your initial purchase.
That brings us to the key point of ' experience '. When we apply for jobs and positions in the corporate world our potential employer is focusing on our EXPERIENCE. So that's why it's important also to ensure your franchisee financing loan is adjudicated with the idea that you as a business owner have relevant experience in your industry. A solid example is the restaurant and hospitality industry, where long hours and people and operational expertise are critical.
4 SOLID SOLUTION TO FINANCING YOUR FRANCHISE
In Canada, your franchise loan is not necessarily going to come from a conventional lender. In fact, it almost always will not. Your financing will come from various financing options -
Specialty franchise lenders
The BIL/CSBF program - (Our preferred choice!) This is the Canadian version of U.S. ' sba loans' !
Leasing companies
Private investors
COST OF FINANCING
Interest rates and terms will vary depending on the type of financing you choose and your overall personal credit history. The interest rate in funding your franchise may be a blended rate as often different types of financing are cobbled together. In some cases, you might be buying an existing franchise and a seller financing component may also be an option based on the nature of the franchise agreement and approval of the franchisor.
Repayment terms themselves will vary based on the nature and amount of financing you need, and whether it's a debt of cash flow type of funding. In certain cases, there may be a real estate component to your transaction, which is often financed separately in a special purpose entity type of legal incorporation.
CONCLUSION
Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in ensuring your franchise business finance needs become not a disaster, but a success! Whether it's bank loans or non-bank business loans we want to help the entrepreneur in the franchise industry - a key part of Canada's economy.
7 Park Avenue Financial :
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Email = sprokop@7parkavenuefinancial.com
Click Here For 7 PARK AVENUE FINANCIAL website !
7 Park Avenue Financial provides value-added financing consultation for small and medium-sized businesses in the areas of cash flow, working capital, and debt financing.
Business financing for Canadian firms, specializing in working capital, cash flow, asset based financing, Equipment Leasing, franchise finance and Cdn. Tax Credit Finance. Founded 2004 - Completed in excess of 100 Million $ of financing for Canadian corporations.
Stan has had a successful career with some of the world’s largest and most successful corporations. He is an experienced
business financing consultant
.Prior to founding 7 Park Avenue Financial in 2004 his employers over the last 25 years were, ASHLAND OIL, ( 1977-1980) DIGITAL EQUIPMENT CORPORATION, ( 1980-1990) ) CABLE & WIRELESS PLC,( 1991 -1993) ) AND HEWLETT PACKARD ( 1994-2004 ) He is an expert in Canadian Business Financing.
Stan has over 40 years of business and financing experience. He has been recognized as a credit/financial executive for three of the largest technology companies in the world; Hewlett-Packard, Digital Equipment and Cable & Wireless. Stan has had in-depth, hands-on experience in assessing and evaluating thousands of companies that are seeking financing and expansion. He has been instrumental in helping many companies progress through every phase of financing, mergers & acquisitions, sales and marketing and human resources. Stan has worked with startups and public corporations and has many times established the financial wherewithal of organizations before approving millions of dollars of financing facilities and instruments on behalf of his employers.
Click here for the business finance track record of 7 Park Avenue Financial
Stan Prokop
7 Park Avenue Financial/Copyright/2020
