You Need More Than A Franchisee Business Plan When Financing a Franchise In Canada !

Canadian Franchising Loans And Finance


Information on financing a franchise in Canada . The Franchisee Business Plan is important, but there is more you need to know!




Purchasing and financing a franchise in Canada. Of course you do in fact need a franchisee business plan to support that transaction, but it's safe to say you need to cover off a lot of the other basics also. Let's examine how your business plan works within your overall finance strategy to successfully complete a franchise purchase in Canada. Oh, and by the way, that covers both a new purchase as well as buying an existing franchise from a current owner, in effect a ' resale '.

It is safe to say that many ' non financial' oriented people find the basic request for a business plan somewhat of a challenge. How much time do they need to spend on such a document, and is there a perfect format that might guarantee a greater chance of purchase and financing success?

While we're quite confident that almost everyone these days can prepare some sort of business plan (it could almost even be a strong executive summary) the reality is that if you omit some of the basics the lender is looking for your overall purchase might in fact be temporarily at risk. That's not a good thing.

A good way to look at a franchisee business plan is to simply view it as a sort of ' blueprint' or ' road map ' to franchising success. We remind clients that down the road you can go back to the document and use it as a benchmark for how you are in fact doing financially, as opposed to what you expected to do!

The other aspect of a business plan is a pretty fundamental one - it makes you think! By working your way through a plan it forces you to address certain issues you may not have considered. Things like profits, cash flow, debt repayment ability, etc.

There is no one perfect document that makes a franchise business plan. The basics are fairly common sense - it describes yourself, your proposed new franchise, it outlines management and staff, and provides a basic description of the industry and business model you have chosen to be a franchisee in.

Typically you are preparing your business plan for a franchise lender, although we have seen in some cases that the franchisor itself asks you to present your plan in the context of purchasing their franchise. We would suspect they want to see if you know what you are doing!!

The franchisee business plan is certainly key in respect to assessment of the document by your lender. A good advisor, banker, lender etc will typically work with you to point out any deficiencies in the plan.

Typically the financial portion of your plan comes from specific or general information you have received from your franchisor on revenue, profits, and potential challenges.

Canada's CSBF/BIL program is one of the largest, if not the largest facilitator of franchise loans in Canada. That loan, in combination with your own equity or investment can successful complete any franchise financing within the 350k cap of the program. It can benefit you because in effect the government becomes your co-signer on the loan, guaranteeing to your financial institution a large part of the loan.

We would point out that you can have the perfect franchise picked, complete a solid business plan, and still encounter financing challenges simply because you are working with the wrong people. You want to ensure that you are working with a franchise funding or banking expert that will significantly fast track your success.

So, you do in fact need a solid business plan for your franchise, but working with the right team, and using your plan as a road map for success is a great working strategy. Speak to a trusted, credible and experienced Canadian business financing advisor to round out your chances of finance success.





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/financing_a_franchise_franchisee_business_plan.html

Important Lessons On Financing A Franchise In Canada - Franchise Business Loan Success

Financing Those Great Franchise Opportunities in Canada

Information on financing a franchise in Canada , The right franchising business loan is critical to your entrepreneurship success!




It might be a proven business model, but funding that model can be a challenge without the right information and assistance. We're talking about financing a franchise. A franchising business loan done properly is of course what is going to make those franchise opportunities you've chose work.

So is there a cost to buying into what most people recognize as a ' proven system ‘. The essential cost of course is your own personal investment into the business, as the type of financing that you obtain to acquire, and grow your business.

While many clients come to us with the mindset that financing a franchise is a ' start up ' type of business that comes with all sorts of risk and challenges the reality is that in many ways financial institutions and other lenders view this business model a safe way to enter into entrepreneurialism. And that translates, when you know what you are doing, into financing opportunities to create success for your vision.

A typical question we get is whether the type of business or brand or reputation of franchise opportunities in Canada matters relative to the finance challenge around acquiring that business. In general we can say it does not. Of course if you have been lucking enough to acquire the rights or an existing unit with an international brand that is already established that’s one step ahead, but the reality is that each new franchise financing opportunity is typically handled on its own merits.

In Canada you can typically be expected to put in a minimum of 10% permanent equity into your business when utilizing one of the most popular finance programs available to franchisees. However to make that transaction work, and get approved realistically you should be prepared to demonstrate the ability, not necessarily the cash, to fund up to 30 -40% of the acquisition.

Don’t forget also that an existing franchise, wherein you are purchasing for a franchisee who is selling is generally financed under the same mechanisms as a new unit. In Canada it always feels like the majority of franchises are Quick Service type restaurants but given that the franchise industry in Canada represents almost 50% of the economy you can be assure there are lots of other industry business models out there offered by Canadian, U.S. and international franchisors.

If there is one ' trick ' ( can we actually call it a trick?!) to financing a franchise in Canada it probably boils down to being prepared in advance for financing while at the same time working with a franchise financing institution or advisor who has special expertise in this type of finance.

In Canada many of the well known brands in franchising do in fact have relationships and packages available to you with 2 institutions, our chartered banks and one international franchise finance firm. However, we want to make it clear there is certainly no guarantee on financing your new business just because a relationship may have been forged in the past.

A franchising business loan in Canada is most easily accomplished via the federal BIL/CSBF program. This can be complimented by equipment and asset financing as well as working capital solutions that are either entwined or independent of the main financing.

Speak to a trusted, credible and experienced Canadian business financing advisor on franchise opportunities that can be properly financing 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 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/financing_a_franchise_franchising_business_loan.html

What Types Of Loans Are Available For A Canadian Franchisee When Financing A Franchise ?

Successfully Navigate Franchise Finance in Canada



Information on financing a franchise in Canada . Does a Canadian franchisee have options when it comes to types of loans and finance that are available ?



What types of loans can a franchisee in Canada expect to attain when he or she is financing a franchise in the Canadian market? Even more importantly how do you qualify and access that financing?

Those are typical questions clients ask us all the time , so lets examine some critical info that will allow you to be successful in completing a franchise finance acquisition.

A good way to start is to build up a bit of a ' checklist ' on what you need to both investigate a franchise opportunity, as well as to present a finance proposal for that opportunity.

We add also that you have the option of course of purchasing a franchise from an existing franchisee, or working directly with the franchisor on a new unit acquisition. There is a big difference in purchasing an existing franchise for a number of reasons, some good, some not so good. First of all an existing unit of course allows you to independently validate the financial results and assets of that business, that’s a good thing. Your accountant, a Canadian business financing advisor, lawyer, or appraiser can assist in various ways to validate the true value of your purchase.

When you are financing an existing franchise it is important to ensure you are completing the transaction as an ' asset sale ' as opposed to a ' share sale '. It is extremely difficult, if not impossible to finance a share sale arrangement.

When you are financing a franchises types of loans dictate what will be financed and how. The key aspects of any franchise acquisition revolve around the following: the franchisee fee, the royalty arrangement, equipment, leaseholds, and sometimes forgotten ' working capital ' to ensure the future growth and health of the business.

If your franchise requires that you have physical leased premises it is critical to ensure that the term of the lease for those premises will at least match the term of the loan financing you are hoping to achieve. Simply speaking, a franchisee can’t get a 5 year loan for a business that has a one year lease! Makes sense, right?

Prior to starting to focus on the financing of your new business and life as an entrepreneur you should of course have completed what the legal and business folks call ' due diligence ' on your franchisor . That might include references from another franchisee, whether they are compliant with franchise regulations in Canada how royalties are paid and structured, etc. The bottom line? There are a lot of rights (and obligations) for you and the franchisor... ensure you understand wha they are.

As we referenced earlier start up capital and final approval can be challenging if you are not well armed with info and resources. In Canada the banks and some other institutions, (but mostly the banks) are the ' approved lenders' for the government BIL/CSBF program.

The vast majority of franchises in Canada are financed under this program. You would be totally missing the boat if you did not at least investigate why this program is one of the best methods of financing a franchise in Canada. The simple reason - just that it has great rates, terms, structures, repayment without penalty ability, and yes, even a low personal guarantee or ' covenant ' requirement.

Maximize your financing potential as franchisee by speaking to a trusted, credible and experienced Canadian business financing advisor who can help you navigate a path to entrepreneurial financing success.




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/financing_a_franchise_types_of_loans_franchisee.html

Financing A Franchise In Canada ? Here Are Clear Finance Options For Approval From Lenders

Pretty well everyone agrees these days that the franchise option is one of the best ways to purchase and run a business. That's the easy thing we can all agree on... but what about financing a franchise and making sure you have a solid knowledge and assistance around finance options and who the lenders are in the Canadian marketplace.

Don't despair. Let's cover off some key basics, tips, strategies, and solutions around your decision to buy a franchise in Canada and become an entrepreneur in the true sense of the word.

After all the euphoria is over re: having made that decision to purchase a franchise a minor problem usually occurs - the cost, and how to finance that cost ?!

It's safe to say you need to pick an ' affordable ' franchise. That’s not as negative sounding as you think, since a large portion of your franchise cost can be financed depending on which financing option you choose. However, lets be clear, there are only two components to any business purchase, debt (what you borrow) and equity (what you put in).

A good rule of thumb these days is a 30 -40% owner equity contribution. That ratio isn’t one that is cast in stone, but is one that we see works constantly for many of our clients.

Remember also that as large as that financing challenge might be that you actually simply have to show that the funds you borrow can be repaid through your cash flow and profit projection. Actually cash flows pay back lenders, not profits. More about that shortly.

In a franchise purchase there are what we call ' soft costs ' and ‘hard costs’. The soft cost traditionally is things like the franchise fee - usually the largest soft cost on your project. Naturally it makes sense the hard costs are things like equipment, leaseholds, even perhaps real estate in some cases.

Financing soft costs is a challenge for any business in Canada. So typically the franchisee should cover them thru his portion of the equity injection. But what about those leaseholds and equipment?

Here's the great news. Financing a franchise in Canada is mostly done through a unique and specialized government loan program called the BIL / CSBF program, monitored by Industry Canada, and administered by Canadian banks under the auspices and watch of the federal program.

Is the BIL a great program? We let our clients be the ultimate judge, but in our humble opinion it provides, bar none, the best finance options for a huge amount of the Canadian franchise industry. The bottom line on the program? Simple. Great rates, terms and flexible structure, and are you ready, a limited personal guarantee. Even the big boys in business in Canada cannot often escape that one!

When clients ask us for some basic key tips and advice on dealing with a franchise lender, or even isolating who these lenders are we always revert back to BOY SCOUT MOTTO 101 - BE PREPARED! Being prepared is simple, but requires a razor sharp focus on having a crisp business plan in place, some financial projections that guess what, make sense! It should be a document that covers your experience, highlights your purchase, and most importantly, shows how you will succeed financially - i.e. pay back the lenders based on the financing options you have chosen. Simple as that.

Are the BIL finance options the only method to finance a franchise? Definitely not, there are some independent finance options out there, and in many cases we supplement the overall financing plan with equipment loans and working capital financing, which also has to be addressed early on in your planning.

If you are committed to purchasing a franchise you need clear guidance and assistance on financing a franchise successfully. You don’t get a lot of chances to do things right in the world of finance, borrowing, etc. Speak to a trusted, credible and experienced Canadian business financing advisor to ensure you maximize those finance options to your benefit.

P.S. Good luck in your new role as a Canadian entrepreneur.






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.parkavenuefinancial.com/financing_a_franchise_finance_options_lenders.html

Financing A Franchise In Canada ? Here Are Clear Finance Options For Approval From Lenders

Pretty well everyone agrees these days that the franchise option is one of the best ways to purchase and run a business. That's the easy thing we can all agree on... but what about financing a franchise and making sure you have a solid knowledge and assistance around finance options and who the lenders are in the Canadian marketplace.

Don't despair. Let's cover off some key basics, tips, strategies, and solutions around your decision to buy a franchise in Canada and become an entrepreneur in the true sense of the word.

After all the euphoria is over re: having made that decision to purchase a franchise a minor problem usually occurs - the cost, and how to finance that cost ?!

It's safe to say you need to pick an ' affordable ' franchise. That’s not as negative sounding as you think, since a large portion of your franchise cost can be financed depending on which financing option you choose. However, lets be clear, there are only two components to any business purchase, debt (what you borrow) and equity (what you put in).

A good rule of thumb these days is a 30 -40% owner equity contribution. That ratio isn’t one that is cast in stone, but is one that we see works constantly for many of our clients.

Remember also that as large as that financing challenge might be that you actually simply have to show that the funds you borrow can be repaid through your cash flow and profit projection. Actually cash flows pay back lenders, not profits. More about that shortly.

In a franchise purchase there are what we call ' soft costs ' and ‘hard costs’. The soft cost traditionally is things like the franchise fee - usually the largest soft cost on your project. Naturally it makes sense the hard costs are things like equipment, leaseholds, even perhaps real estate in some cases.

Financing soft costs is a challenge for any business in Canada. So typically the franchisee should cover them thru his portion of the equity injection. But what about those leaseholds and equipment?

Here's the great news. Financing a franchise in Canada is mostly done through a unique and specialized government loan program called the BIL / CSBF program, monitored by Industry Canada, and administered by Canadian banks under the auspices and watch of the federal program.

Is the BIL a great program? We let our clients be the ultimate judge, but in our humble opinion it provides, bar none, the best finance options for a huge amount of the Canadian franchise industry. The bottom line on the program? Simple. Great rates, terms and flexible structure, and are you ready, a limited personal guarantee. Even the big boys in business in Canada cannot often escape that one!

When clients ask us for some basic key tips and advice on dealing with a franchise lender, or even isolating who these lenders are we always revert back to BOY SCOUT MOTTO 101 - BE PREPARED! Being prepared is simple, but requires a razor sharp focus on having a crisp business plan in place, some financial projections that guess what, make sense! It should be a document that covers your experience, highlights your purchase, and most importantly, shows how you will succeed financially - i.e. pay back the lenders based on the financing options you have chosen. Simple as that.

Are the BIL finance options the only method to finance a franchise? Definitely not, there are some independent finance options out there, and in many cases we supplement the overall financing plan with equipment loans and working capital financing, which also has to be addressed early on in your planning.

If you are committed to purchasing a franchise you need clear guidance and assistance on financing a franchise successfully. You don’t get a lot of chances to do things right in the world of finance, borrowing, etc. Speak to a trusted, credible and experienced Canadian business financing advisor to ensure you maximize those finance options to your benefit.

P.S. Good luck in your new role as a Canadian entrepreneur.

How Charlie Sheen and I Discovered How Financing a Franchise Works – A Canadian Franchise Lending Loan Business Story !

This is a strange one. I had a dream last night that I was on a business trip searching for the answer to financing a franchise in Canada. To many people franchise lending and getting a franchise loan for their new business is a challenge.
I wanted to reduce the risk and increase the chances of success for Canadian franchisees.

When I returned from the trip who did I find at our offices but Charlie Sheen, a very famous personality these days. I was surprised but I simply figured that he too wanted to know the secrets and inside tips on franchise financing in Canada. So not too surprising that he had such a strong interest in this area.

Charlie wanted to know about my trip - he seemed excited about being able to know the methods in which franchises were financed in Canada - he seemed totally interested in everything I was about to share .

I told Charlie that I had stumbled upon the exact method under which most franchises were financing in Canada, and moreso, I knew exactly how to complete transactions successfully. He was all ears.

In order to access the capital you need for financing a franchise in Canada wouldn't it be safe to say that you needed to understand who is offering this financing. I told Charlie that although there are a very small handful of specialized firms in franchise finance that the actual majority of franchise lending in Canada is done under a specific program called the CSBF program. It is underwritten and sponsored by Industry Canada, and the government mandates that Canadian banks ' administer ' the program. Charlie’s eyes were locked on mine. He couldn’t believe government on a daily basis was financing franchises.

Charlies asked if it was possible to ensure that the whole process of obtaining a business franchise loan wasn’t time consuming and frustrating. I assured him that if the prospective franchisee was properly prepared it was a smooth process.

Charlie wanted to know more. ‘So this actually works?' he asked. I assured him it did. To keep it simple for Charlie I explained that a good way of sizing up your ability to get approved is thinking like the lender. In small business financing, because that’s what a franchise is, the focus is on what some call the 4 C’s.

Charlie moved closer. What are the 4 C's he asked? I explained that they were character, capital, capacity and credit. Simply speaking if you have a good business reputation and experience, some funds of your own, and reasonable personal credit history then the ' capacity ' to repay the loan becomes significantly enhanced - bottom line - you will be approved!

Charlie had a question - ' Are you saying that if I am properly prepared I can be successful in financing a franchise?" Exactly, I replied. Ensure that your experienced and credible Canadian business financing advisor works with you to achieve a package that includes a solid business plan, an overview of your experience, a documented cash flow repayment, as well as your ability to put a reasonable personal investment into your new business.

Charlie wanted to know how we could share this knowledge - he suggested a Cross Canada tour we would call ' The Torpedo of Franchise Financing Truth ‘. Not necessary I said , lets just advise Canadian franchisees to seek the services of a trusted, credible an experienced Canadian business financing advisor who will assist them to get the franchise loan and financing they need to begin their new role as entrepreneur/ business owner.

I’ll always wonder if Charlie had the same dream?

--

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/financing_a_franchise_lending_loan_business.html

How Much Will A Business Franchise Loan Cost When Financing A Franchise In Canada ?

The cost of a business franchise loan is often the first questions clients ask when talk to us about financing a franchise in Canada.
5.5% is the answer. So that’s it – end of story – you have your answer! Of course we're being a bit facetious because what we are referring to is simply the current interest rate on the most popularly utilized loan vehicle for franchise financing in Canada. Cost is of course one thing, getting approved, executing on your franchise financing properly, and finally not entering into the wrong type of financing strategy is another issue altogether.

Let’s examine the challenge and the reality of franchise financing as it relates to costs, methodology, and, as we said, doing it right.

If you aren’t aware of the specialized methods of franchise financing in Canada and that most popular loan vehicle we discussed then you certainly are a poorly informed and at risk entrepreneur in the franchise environment . Simply walking into a bank and asking for a franchise loan in Canada does not work , as the bank views a new franchise, as it does any other business frankly, as totally based on the 100% collateral and credit worthiness of you the borrow .

If that’s the case then, our clients ask, why have they heard that thousands of franchisees in Canada get bank financing? Good question! It’s simply that the majority of financing in Canada is done under a specialize program called the CSBF /BIL program, which is under the auspices of the government and administered by the banks. That key word is administered by the banks.
So what is the cost of that loan? In terms of a pure what is the interest rate? Question the answer is 3 over prime rate, which currently in Canada would bring the transaction to the 5 1/2% range. (As prime changes this rate might fluctuate).

But if you as a franchisee are looking for a business franchise loan and financing a franchise properly the other features of this specialized loan are even more compelling - they include a limited owner guarantee, a loan size of up to 350,000.00, and other enhancements. That cost, when financing a franchise in Canada is clearly the best deal in town if you accept that a franchise is a new business - which of course it is, but we acknowledge the franchise is of course built on a successful business model of the franchisor.

Remember also that the cost when financing a franchise in Canada is based on the amount you borrow - unfortunately it cant be 100% because business finance dictates it is both prudent and required that you put some of your own equity in the deal - the more you have invested personally the less financing cost you have, that’s understood of course .

In the U.S. We are told there are specialized tax strategies to take money out of RRSP type accounts without being taxed, to finance your business - that really doesn’t work in Canada and your cost of a business franchise loan will go up considerably when you add in the tax penalty bite of collapsing your savings vehicle.

So. in summary financing a franchise in Canada is achievable - however its specialized, and some of the programs utilized by franchisees are highly specialized to the industry . Finance your new business properly by speaking to an expert is strongly recommended - seek a Canadian business financing advisor who is experienced, credible, and trusted who will help you solve the cost dilemma of financing a franchise 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 7 years - has completed in excess of 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

http://www.parkavenuefinancial.com/business_franchise_loan_financing_a_franchise.html

Looking for Ways To Finance a Franchise ? There Is Only 1 Way When Financing a Franchise Investment!

You're there. You have made the decision. You're committed. You have timelines now. We're talking about your franchise finance decision and the next challenge you have in the franchise process - financing a franchise. How many ways to finance a franchise are there? Only one... the right way! And we'll show you how.

The ability to finance your franchise properly and satisfy the requirements of the franchisor without putting you overly in debt is what it’s all about of course. And if you do it right then you of course have the potential to grow a business, profit from it, and build owner equity for either long term resale of personal financial gain. That's simply what it's all about, and boy does it help if you like what you are doing, at the same time taking on the entrepreneurship role in Canadian business.

The good news is that your are lucky, because franchising couldn’t be any hotter or more popular. Franchises move goods and services in the billions in Canada, and you're now part of that movement.

But let’s be realistic, whether it’s a franchise investment of any other business start up the same critical needs apply relative to planning and financing.

Homework. Did you hate it in school? Well here it is again because we strongly suggest to clients that you are now in homework mode when determining how financing a franchise works. It’s all about planning, which includes ensuring you have a profitable potential business on your hands, as well as understanding ways to finance a franchise in Canada.

Business plans are critical to your franchise investment. It's a case of demonstrating your business has both profit potential plus, and this is what interests the lender, that you have the ability to repay your debt and loans. The franchisor naturally is interested in long term success of the chain, and your ability to pay royalties as they become due, usually monthly.

When you address the franchise finance decision you must consider a number of items - they are as follows - what is the total all in cost, what methods are available to finance each part of the cost breakdown, and finally, and perhaps most importantly, how is the actual financing done.

The costs to assess in a franchise finance investment are as follows - the initial franchise fee, the cost of fixed assets or leaseholds to your business - i.e. equipment, signage, vehicles if required, etc. And finally, if you did all that and didn’t address working capital for ongoing operations and growth then you are setting yourself up for failure.

Clients are always looking to us for a magic solution and a one stop finance strategy for their franchise investment. The closest we can come to that is the government BIL/CSBF loan, under which the majority of franchises are financing in Canada. You can successfully augment this strategy by equipment financing for a variety of assets as well as a small working capital loan, usually unsecured. Don't forget also that your own owner equity investment becomes the final piece of the puzzle.

And getting back to our business plan, ensure that you have covered off all the debt you need and that if reflects your ability to pay it back.

Financing a franchise. Challenging? Yes, we guess so. Possible? Of course. Speak to a trusted, credible and experienced Canadian business financing advisor with franchise experience who will help you navigate, successfully, the only way to finance your new business - the right way!
--

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 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

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

Financing A franchise? - Here's How Franchise Finance Works in Canada

Searchin' .. and Searchin.. for franchise finance in Canada ? The reality is that it's available, and we will share some common sense approaches to successfully financing a franchise in Canada.

Although you may have spent a significant amount of time in picking what you feel is the right franchise finance opportunity the reality is that we are hoping that you have spent, or will devote an equal amount of time to the financing of the purchase. Securing funding in any specialized field is clearly a challenge so working with an expert in the field is always advisable. This is no time to be a rookie when it comes to the successful financing of your business.

Many franchisees without any type of finance background might assume that traditional finance is available through institutions such as banks and credit unions. The answer to this assumption is actually no... And yes. Let's explain. We are not aware of any Canadian bank that will set up a specialized term loan for the full financing of your business. (This might happen if you have significant outside collateral, guarantors, pristine credit, etc - but generally no). But, the reality is that the banks in fact do indeed do most of the franchise finance in Canada - but it’s done under specialized program called the CSBF/BIL program.

This should be your first point of call in financing your business. However, here's where the ' expert' advice is needed, as the program only covers the financing of certain aspects of the business, and you will need to cover off portions of your purchased that wont be financing through this program . This would be things such as ongoing working capital, the franchisee fee itself, etc.

It's probably commons sense but aligning yourself with a franchisor that has a good brand and reputation and a successful share of their industry’s marketplace is in fact going to make financing a franchise in your case probably easier.

What category are you in? we ask clients . What we mean by that is that you might be opening a brand new franchise, or alternatively purchasing a business that is already a franchise and the existing owner wants to sell. There are advantages and disadvantages to both strategies, and there is certainly no cut and dry answer around what established or new business might be best for you. A quick example - it might be sometimes ' easier' to finance an existing franchise that is being sold because the assets and cash flow and profits are more realistically able to be demonstrated.

In certain cases some franchisees might want to expand their business via additional capital - that also requires a specialized focus.

In summary the key elements of financing a franchise in Canada revolved around your ability to source and successfully complete financing that suits your purchase. This involves your own investment, known as the ' owner equity ' a well as the financing through programs such as the BIL program. Financing specific hard assets and complementing the overall finance package with a working capital term loan or operating facility will also get you tot he goal line.

Pick your franchise carefully, and seek a trusted, credible and experienced Canadian business financing advisor who can help you structure the proper finance package that suites your overall acquisition and growth needs.
--
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/financing_a_franchise_franchise_finance.html

Secrets For Success When Financing a franchise In Canada – What Franchise Lenders Won’t Tell You

The dream is becoming a reality . You have selected a franchise in the Canadian marketplace. That franchise is either an existing unit, or a resale from a currently successful (hopefully!) franchisee.

When you are contemplating the purchase of a business the cost and financing of that business becomes a potential major obstacle . Let's examine how financing a franchise works and is done in Canada .Who are the franchise lenders and what do you need to do to get your business financing past the goal line .

We recently read an article entitled 'How to Buy a Franchise With No Money Down '. Lets be clear on that point, that franchise financing is not available on the 100% OPM plan! OPM of course stands for other peoples money, and you should fully expect to make an equity investment or contribution into the business . That is driven from the fact that in business no lender will take all the risk and allow yourself to take none, which seems fair to us!

In your personal finances hopefully you are living within your means, as the expression goes. When it comes to business , and financing a franchise you should have a general sense of the overall cost of the franchise acquisition and whether that number makes sense to you from a personal net worth and owner equity contribution . Bottom line; don’t expect to buy a 700k franchise with a 10k owner investment - that wont work.

So what is the magic number then? Fortunately, or unfortunately, that magic number of your equity contribution seems to have increased over the last several years. We advise clients realistically that they should be prepared to put in anywhere from 25-50% of the purchase of the business.

The bottom line is that a solid equity contribution from yourself equals less debt on your opening balance sheet, and that's a good thing.

We spend a lot of time with clients constructing the cash flow portion of the business plan re their franchise acquisition. That is because your revenues and expense must be accurately reflected, and out of those calculations flows your ability to service debt, i.e. make your loan payment!

By far the most tried and tested method for financing a franchise in Canada is a program that is underwritten by our good friends in Ottawa. That’s the government by the way. A program that is technically referred to as the BIL/CSBF program, (aka ' Small Business Loan ‘) is the most popular vehicle for financing a franchise.

Clients are always asking what qualifications are required for the program. We can broadly summarize them as follows - a solid well prepared business plan, some industry experience ( we don't recommend that computer programmers buy a restaurant!) , a decent personal credit history, and a , relatively speaking good personal net worth, i.e. home owner , etc.

One mistake many potential franchisees make is to think that their franchisor will become a franchise lender. That’s not the case - in case you haven’t figured it out now they are in the business of selling a franchise, not financing your dreams.



Financing is tough, whether you are General Motors or buying your first franchise in the entrepreneurship dream. Speak to a trusted, credible, and experience business financing advisor who can assist you in your franchise finance strategy for success.