Franchising Loans In Canada : This Is How You Finance A Franchise

Don’t Miss The Golden Age

Of Franchise Opportunities Due To Financing – This Is Gonna Be Good!




OVERVIEW – Information on franchising loans in Canada. When it comes down to how to finance a franchise the right information and expertise guarantees entrepreneurship success.





When it comes to how to finance a franchise in Canada the ability of the franchisee to complete that process successfully allows him or her to enter an industry that for all intents and purposes is... booming! We suppose we can even call it the ' Golden Age ' as a huge portion of today’s economy is in fact derived from the franchise industry itself. Let's dig in.

Only two types of financing best address funding a franchise. It boils down to either a specialty firm that funds this type of venture or a Canadian chartered bank that participates in , again, ' specialized' financing such as Canada's CSBF program - which is often perfectly suited to complete the financing required in assets such as equipment and leasehold improvements.

We should mention also that it is very possible to finance a franchise purchase for an existing franchise - with the two caveats being that of course the franchisee will want to determine the true motives for the existing franchisee wanting to sell the business ; as well as obtaining the required permission and approval from the franchisor.

Again in both of the above cases specialty franchise finance and bank financing are potentially available to complete the transaction.

As with any time of business financing in Canada a solid loan package must be evident for franchising loans to be approved based on your requirements. The typical loan package should not seem like a daunting process - it’s essentially info about yourself, your business, and your prospects.

Included in that ' loan package’ will typically be the following:

Personal financial data - i.e. net worth, credit history, etc

Business Plan

Cash Flow

List of items to be financed - (this should be broken down into several categories, including items to be financed by the owner, assets, leaseholds, franchise fees, etc

Note also that careful attention in the business plan and cash flow should be paid to repayment of the loan, future financing needs, and the amount of owner capital being put into the business.

We often are asked by clients if the reputation or size of the franchise is a key factor in financing approval. On balance we can say that is not necessarily the case and certainly if your franchisor has an existing portfolio of corporate or franchisee locations that is successful size clearly ' doesnt' count!

One technical point is that ' service ' franchises are very difficult to finance since they have little need for hard assets, leaseholds and are often cash based businesses. A good example might be a Home Inspection franchise.

Franchising loans should be tailored to individual needs, as that relates to term of the financing, rates, repayment, external collateral, etc. When it comes to external collateral, unless you are financing the venture predominantly on your own both a specialty franchise firm, or a CSBF loan will typically require no external personal collateral - i.e. mortgages on your home, security deposits, etc.


Franchising in Canada is experiencing tremendous success. Prospective Franchisees considering this entrepreneurship option should seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist them in how to finance a franchise properly to ensure maximum chances of growth and profit success.



Stan Prokop - 7 Park Avenue Financial :


http://www.7parkavenuefinancial.com


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 90 Million $ of financing for Canadian corporations . Info /Contact :

7 Park Avenue Financial = Canadian Franchise Financing Expertise





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' Canadian Business Financing with the intelligent use of experience '

Stan Prokop

Not Your Imagination ! It’s Possible To Finance A Franchise In Canada – A Franchising Loan ‘ How To’ !

Canadian franchise Financing Decisions You Need To Make


Information on how a franchising loan works in Canada. What are Options for business entrepreneurs who wish to purchase and finance a franchise?





One of the main reasons clients tell us that they wish to purchase a franchise is their belief that this type of business opportunity in essence gives them a head start in owning and successfully running a business... and we couldn’t agree more. But that life decision, and a big one at that, comes with the challenge of how to pay for, or finance a franchise. A franchising loan properly structured can make or break your business opportunity.

There really are 4 key categories or areas that you should focus on in both selecting and financing your franchise. They are the actual type of business you wish to be associated with... ie big, small, service based, asset based, hospitality based, etc. After that comes the all important analysis part of your decision. what we could call ' running the numbers.

Those numbers must then be translated into an effective financing plan to finance a franchise. i.e. getting a franchising loan that makes sense from a viewpoint of debt load, your own equity, and the right rates, term and structure that make business and financial sense, without putting you at risk.

Finally the 4th major consideration topic is simply ensuring you have weighed the pros and cons of owning an independent business under the franchise mode. The reality is though that you are in good company, as thousands have gone before you successfully, and a huge part of the Canadian economy (you’d be surprised how much) relies on the franchising industry for its products and services. And God knows the economy needs all the help it can get these days.

We tell clients that when they look to purchase a franchise they need to do a total... lets call it ' sanity check' on the numbers. Key questions need to be answered, including whether the investment will provide you with the proper return on your own investment. That’s an important concept when you think of it, and easily overlooked by franchisees that don’t have a strong financial background.

In essence you are simply asking yourself if the amount of money that you have to put into the business personally is going to be rewarded over time with a return. That makes total sense, don’t you think? In today’s Canadian franchising environment business owners can be expected to put anywhere from 10- 50% into their business. That amount varies with the size and type of franchise that you purchase.

In assessing your financial needs you need to take into account funds you need to open and purchase the business, as well as what type of working capital you need to maintain and grow the business - quite frankly that’s the same challenge that any business purchaser faces, whether or not its a franchise .

That ' pros and cons' analysis we spoke of is also critical at this point in your decision - you need to evaluate the cost of buying and financing a franchise against using that capital or debt to start a business . However, the concept of proven business models and branding is key, so that makes the assistance you get when you want to finance a franchise easier.

In Canada franchises are financed via one or two specialty finance firms, which tend to focus on the major players and names in the industry. Thousands of others are financed under the auspices of the government BIL /CSBF program. The attractiveness here relates to great terms, rates, structures, low personal guarantees, and flexible repayments.

Want help on making one of the most important financial decisions in your business life? Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in making the right decision and facilitating a franchising loan that works... for you !


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 7 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/franchising_loan_finance_a_franchise.html

Pitfalls And Solutions When You Finance A Franchise With Franchise Financing Companies In Canada

When you want to finance a franchise in Canada the type of financing companies you work with and how you address your new business acquisition as an entrepreneur is as important we think as the time and research you spent on choosing your new business.

Let’s examine how you can make it much easier process from a viewpoint of time, cost, and ultimate success.

Is franchise financing in Canada viewed as an excepted and positive method of acquiring a business. The facts certainly point to that. The Canadian franchise association has hundreds of franchisor members, and most financial institutions that participate in franchise finance advertise aggressively on their support of this type of Canadian business financing.

Once you have made that decision and chosen your franchise type you want to be in a position to spend the minimum amount of time in securing financing for your business, while at the same time doing it right. That’s when you need to understand the basics of a complete package that will virtually guarantee you success and full approval for the funding you need.

Are there some pitfalls along the way? There sure can be. Time and time again we meet with clients who either have little or no experience in the business they are getting into, and coupled with that, don’t have any financial support or cushion that allows them to properly finance a franchise without full depleting their personal financial resources.

We all read about companies that fail because they have too much debt and are unable to meet loan obligations - that’s the pitfall you want to avoid in franchise finance. The reality is, and this is a surprise to many clients... that you dont want to borrow 100% of the funds you need, but at the same time you dont want to cash in your RRSP savings or fully mortgage your house either. The optimal blend of debt and equity in your franchise tends to be 2 or 3: 1. By that we simply mean that for every dollar you put into your new business you should plan to have only 2 or 3 dollars of debt. And quite frankly that applies to most businesses in corporate life.

You absolutely need a business plan for your franchise, as franchise financing companies and banks want to ensure that you have properly thought out how the business will generate sales, and hopefully profits.

The pitfall we see many times in client plans is that their plan is very marketing oriented, and in reality all the lender wants to see is some financial logic that will demonstrate how the franchise loan will be repaid .

Lenders call that debt service, and you want to be able to demonstrate that you will have cash flow coverage that allows you to both run the business and repay your franchise loan.

If you want a one stop solution for the majority of franchises in Canada, from a finance perspective it’s a customized loan called the BIL/CSBF program. It's underwritten by the government, has fabulous rates, terms and structures, and provides you in most cases with the majority of financing you need. Reasonable personal credit history is a requisite for this type of financing. Some private independent firms also offer franchise solutions when it comes to financing, including leasing of equipment.

Speak to a trusted, credible and experienced Canadian business financing advisor on what solutions you can effectively and properly implement to achieve financing success.

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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 7 years - has completed in excess of 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/finance_a_franchise_financing_companies.html

Starting a Franchise ? Looking For Business Money To Finance A Franchise?

The priority of securing business money when you have selected and are starting a franchise becomes even more important as you focus on getting the business started and up and running .

Let's discuss some of the sources of capital in the Canadian franchise environment, and we'll share some tips and strategies that have helped many other clients looking for Canadian business financing in the franchise environment.

There are actually 5 sources of capital that will successfully allow you to complete the financing of your new business. They include your own equity injection into the business, i.e. your down payment, bank and institutional financing (its
s not what you might think, so stay tuned on that one ) , asset financing via an independent finance company, and finally a potential vendor take back from either the franchisor of the existing franchisee from whom you are buying the business .

Let's therefore backtrack a bit and hopefully give you some solid tips and new information around how this financing is, in our words ' cobbled together ' to give you a total financing solution for your new business.

It's always the same question when we talk to clients... ‘How much do we have to put in ‘... they are of course referring to their owner equity investment into the business. The truth is that the amount varies when it comes to the financing portion of your business. That amount is flexible and can vary anywhere from 10 - 50 per cent depending on the size of the financing and the amount of working capital you want to have on hand d on day once that will allow you to finance the business properly .

Another tip we'll share in the above mentioned ' owner equity ' area is simply that in many cases some franchisors will actually mandate how much you ' have ' to put in. We therefore recommend to all clients that they get a clear understanding up front so there are no surprises. In defense of the franchisor they are probably relying on their own experience that allows them to have determined over time what it takes to successfully run and grow one of their units in their franchise system.

So how exactly do the banks in Canada participate in the starting of your franchise? Is it as simple as approaching your bank and determining what business money they will lend to finance a franchise? Not really we tall clients. We have rarely if ever seen a direct term loan to cover the financing of a franchise. But yet the banks do participate in most of the franchise financing in Canada. How? They piggy back on a special government program called the BIL/CSBF programme. This loan is underwritten by Ottawa, and has very generous terms and conditions around rate and structure. Unbelievably you are actually only guaranteeing personally 25% of the loan, which is another benefit.

So our cobbling together of a financing package is getting there - another great strategy is to finance separate individual assets with an independent lease firm. This type of asset financing is easier to get approved, and can cover a significant portion of any assets that need to be financed.

We spoke of a potential vendor take back from the franchisor or existing franchise as part of the purchase package. We will share with you several tips and comments on this one - namely that you should not fully rely on getting this type of financing in place. Occasionally you might be successful, may times you wont. Why? Simply because the franchisor or existing franchisee is motivated to sell you a franchise, not finance it!

Speak to a trusted, credible, and experienced Canadian business financing advisor in the area of starting a franchise and getting the right business money in place to allow you to complete your new role as a Canadian entrepreneur.
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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 6 years - has completed in excess of 45 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :
http://www.7parkavenuefinancial.com/finance_a_franchise_business_money.html