The Scuttlebutt On Financing A Franchise In Canada . Buying Franchises Requires The Right Type Of Loan

Canadian Franchise Financing Strategies


OVERVIEW – Information on financing a franchise . What type of loan and finance is required when buying franchises in Canada


Looking for some good Scuttlebutt on franchise financing in Canada? And who doesnt love the word ' SCUTTLEBUTT ' - It was the drinking fountain on ships... sailors hung around and shared rumors and gossip, ie Scuttlebutt!

While we are big fans of the term itself what’s more important is to dispel rumors and gossip around the reality of getting a franchise loan in Canada. The one thing we can assure clients is they need a solid business plan and financing package prior to starting the financing process.
While a lot of that information might come from your franchisor you’re basically preparing a financial overview of your new business. And from the lenders perspective they simply want to know how loans they make to franchises will be repaid. Fair enough, right!?

So what amount of funding is in fact required to purchase a franchise in Canada? There are several components to the project - they include the franchise fee, working capital, a loan for leaseholds and equipment or rolling stock, etc.

While all banks in Canada seem to have a lot of content on their websites about financing franchises directly the reality is that this is rarely done on the strength of your proposal alone. So when considering approaching a bank , either alone or with an experienced advisor you might just find that really only two avenues of success for your franchise loan :

External collateral
The Government SBL Loan


While the franchisee certainly has a right to offer up personal collateral, i.e. homes, savings, etc that is not the optimal way to finance a business. That is why thousands of business owners over the years have chosen the Government BIL loan to facilitate the financing of their new business. For financing needs fewer than 350k it’s a solid mechanism for getting you to the franchise goal line!

While specialty franchise financing does in fact exist in Canada it typically requires your franchisor to be part of a larger program which might not necessarily be the case. Oh and by the way lots of third party commercial finance firms such as equipment finance companies can also assist you in portions of your financing.

If we had to summarize a short road map of success in franchise loans in Canada it would be pretty simple:
Have a strong business plan / loan package
Be prepared to demonstrate good personal credit history and business experience
Be able t demonstrate that you can come up with a solid portion of equity in the business - no one is going to finance 100% of the project.

So, if you want to plough through all the scuttlebutt around a franchise financing loan in Canada seek out and speak to a trusted, credible and experienced Canadian business financing advisor.



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-franchise-loan-buying-franchises.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

Financing a Franchise. Here’s 4 Things To Worry (Or Panic !) About When Looking For Your Franchise Loan . Business Loans Are Critical To Success

Un- Worry Your Way To Canadian Franchise Success

OVERVIEW – Information on financing a franchise in Canada. Getting the right franchising loan or loans is critical to your success.


Financing a Franchise in Canada. We're all for ' un worrying ‘,

and not panicking, but the reality is that there are some key issues, financial, and otherwise when it comes to success in this entrepreneurial segment of the Canadian economy . And yes, the right franchising loan, or combination of loans

Although we’re focusing on franchising finance, there are of course other issues to get ' un worried ' about. They might include your overall personal suitability to be a franchisee in your franchisors system.

You also want to be able to have a strong comfort level that you have aligned yourself with the right franchisor. We're proudly Canadian of course, but we can't forget that many very solid franchise opportunities come out of the U.S. market based on their organization in Canada. In some cases you might be dealing with the Master franchisee of a U.S. organization, someone who has simply purchased the rights to the Canadian territory. Lucky them!

Another key aspect, our third in fact is the structure of the franchise when it comes to franchise fees and royalties. The reality also is that this issue is a key component of financing a franchise. Let's explain.

Although disappointing to many Canadian prospective franchisees typically the actual franchise fee is not financeable unless you are dealing with a very specialized franchise loan firm. This is typically shown as ' Goodwill ' on your balance sheet, reflecting the value of your franchise relationship from a financial perspective.


So make sure to carefully assess your ability to include that part of your business commitment in your total cash flow and cost to acquire the business strategy. The most typical franchisee fee we see when franchises are in the 350k range tends to be $ 25,000.00.

Right behind the franchisee fee when it comes to addressing our ' worrying ' are the royalty payments that come with your franchise obligation. More often than not these tend to be in the 6- 8 % range, and are a key driver in your cash flow analysis. That’s a good chunk of your profits if not managed properly.

So, we have covered off 3 key things to worry about when it comes to buying and financing a franchise - your overall suitability to run your own business, picking the right franchisor as a long term partner, and finally franchise and royalty fees.

Oh yes... about that financing!! In Canada your business can be financed by a specialized franchise lender, the government via the BIL/CSBF loan program, and a combination of lease and working capital finance options from the non bank sector.

Want to get unworried about financing a franchise? Seek out and speak to a trusted, credible and experienced Canadian busines financing advisor who can ensure you have access to the right financing options, and round out your franchising loan with the right combination of debt and working capital. Get ' un worried ' today!

7 PARK AVENUE FINANCIAL
CANADIAN FRANCHISE FINANCE





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_franchise_franchising_loan_loans.html

Canadian Franchisee Loans & Business Funding – 4 Secrets To Financing A Franchise

The inside edge. You want it, we have it! Have we got some tips and secrets to share for you.

We're talking about financing your franchise - the successful completion of your entrepreneurial dream in Canada. As a franchisee you want to be aware of your options in loans and funding programs that are geared specifically to financing a start up business in the booming franchise industry.

We're going to discuss 4 key elements of a proven formula for franchise success. What are they? Simply speaking its ensuring you have a business plan that accurately resembles the financial aspects of your business. Number two is the types of emphasis that is put on your own personal background and credit history. Number 3 is the knowledge of franchise financing options in Canada , and number 4, ( often # 1 in your mind probably .) the amount of personal funds you have to commit or invest to get your business going and your franchisee funding approved .

Let's dig in! OPM. What is it? It's stands for other peoples money and its critical you understand that a franchise is composed of two elements with respect to your financing plan - debt ( what your borrow ) and equity ( what you put in ). Our key point here is simply that while there is no proper mix of what works for the combination of those two elements. No franchise is financed with 100% borrowed funds - conversely you don’t want to ' pay cash ' for your business and risk all, or a lot of everything you own (house, savings, etc) for a start up business such as a franchise.

We will also share with you that some of the very specialized franchisee loan program in Canada typically require a 30 - 40% owner equity, or down payment. That can be achieved in several different ways.

Should you tap into your retirement plans to fund your franchise? That’s not our call, but if you have capital outside your savings we would not recommend collapsing RRSP’s, or taking out home mortgages, etc for the purpose of financing and funding your franchise.

Clients often ask how their personal credit history affects their ability to get franchise financing. In general we can say it’s a key point in the whole approval process. Many Canadians aren’t aware that the entire credit history system in Canada is based on a simple score. You should have a score of at least 650 to be successful in traditional franchise finance. So check your score in advance. And by the way, higher is better!

The business plan is a key element of your whole package. Many clients don’t have experience or financial acumen to prepare a proper plan. Not a problem as you can seek a Canadian business financing advisor, or accountant, etc to prepare your plan. A good basic plan comes at a very reasonable cost.

The business plan is your ' total picture ‘of your franchise. Basic elements are yourself, your background and business or industry experience, info on your franchise, and some basic financial projections. Naturally the better recognized and successful your brand the more attractive your perceived chances of success are.

As a franchisee what loans and funding is available in Canada. As unbelievable as it may seem the government of Canada, via Industry Canada, is one of the largest players in your franchise success. A program called the BIL / CSBF program is hugely popular and finances mot franchises fewer than 350k in Canada. We strongly recommend you seek out and investigate this program, it’s probably the key to 95% our client’s success in financing a franchise with funding that comes with great rates, terms and structures and limited guarantees. Bottom line, check it out!

So there you have it, 4 key elements, and secrets if you will, to franchisee financing success. Summarized... a solid business plan, some good business or industry experience coupled with a reasonable personal credit history, a down payment that is aligned to your overall financing needs and personal situation, and , last but not least, knowledge of programs such as the BIL which are geared toward franchise finance success .

So now you know!

P.S. Good luck in your entrepreneurial dream, and going it alone is never good, so seek the services of a experienced , credible and trusted Canadian business financing advisor .



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_franchise_franchisee_loans_funding.html

Financing Your Franchise in Canada - A Winning Formula For Funding Via Franchising Finance Loans

Looking for franchise financing ? The dictionary defines formula as ' a rule or method of doing something ‘. We'll let Charlie Sheen define his version of ' Winning ' for you... but in our case its identifying for new franchisees the best methods of obtaining franchise financing and finance loans for the funding of their new business . Let's get started!

Second challenge after picking your franchise - we are assuming you have already done that, is determining how you will finance it. The Canadian landscape differs significantly from that of the U.S. experience; although we can assure clients that the franchise industry as a whole in Canada is doing very well.

Many franchisees often are concerned about the need and requirement for ' collateral ‘on a franchise loan. That is partly because they view franchise finance in the same manner as they would view a traditional loan application. Wrong! The reality is that our formula calls for no collateral requirement.

The majority of franchises in Canada are funded in two manners; they are the true secret to the winning formula we are sharing. The first and most popular method is taking advantage, (properly, and we'll come back to the term properly) of a specialized government program known as the CSBF/BIL program. Subsidized and ' managed' by a department of government in Canada known as INDUSTRY CANADA the program is the driver behind our winning formula.

Why is the BIL/CSBF loan so appropriate for financing for franchise? Consider this, when you started reading our article you probably thought that you need outside collateral , a huge down payment, and potentially outside collateral to get your ' franchise loan '. Nothing is farther from the truth.

Many franchise experts claim you need persistence and creativity to get a franchise loan financed in Canada. We disagree, you just need an expert and some hard work around satisfying the requirements of the loan program we have identified.

Those requirements include some very common sense things such as a reasonable personal credit history, a positive personal net worth, and a business plan that outlines your experience and expectations of financial success for the franchise funding. This typically includes your estimate of sales, expenses, profits, and, oh yes, cash flow that will repay your loan.

We also point out to clients that there are some other mechanisms we can ' add on ' to the BIL loan to enhance the financial proposal. They are equpment financing or leasing in some cases where hard assets are being acquired, as well as potentially a vendor take back if you are buying an existing franchise from a current franchisee.

Our formula for franchise success could not be more simple - identify your franchise, work with a Canadian business financing expert to maximize your ability to close a BIL loan in a short amount of time. Your package will include your business plan, background experience, and a real focus on how the loan will be repaid. If you need add on financing to make your transaction work consider equipment financing for some assets in the business or a term working capital loan that might compliment the entire package.

Simple. Relatively speaking yes. Speak to a Canadian financing expert on creating a short timeline to your success via our winning formula.

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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/financing_franchise_finance_loans_funding.html

How To Finance A Franchise In Canada – Make Franchise Financing Work!

Is there a perfect, foolproof method on how to finance a franchise in Canada? Naturally there are no sure things in business, but financing a franchise has a 99% chance of success, if, and it’s a big if, you are prepared and have expert knowledge on how this type of business financing is done in Canada.

It’s not secret that franchise finance is hot! From the downsizing of companies in Canada and the U.S. to simple entrepreneur dreams thousands of would be ' business owners' are looking to explore the franchise dream for personal and business success.

Franchise financing pays off, as we said, if you are well prepared. You also have to be in a position to understand that the concept of OPM, or ' others peoples money ' doesn't work in any business, let alone a start up franchise. By that we simply mean that you have to have somewhat of an investment to make in the business. Those funds must be accessible and you have to be in a position to demonstrate the source of those funds.

Typically our clients make their equity deposits into a franchise business from savings, or friends and family type donations. In many cases they have either liquidated assets, i.e. savings, or perhaps collateralized their home via personal line of credit, etc. The bottom line is simply that you should generally be in a position to put 30-40% down as your own investment in the business.

You are now in a position of being able to find the remaining funds you need to both purchase, and of course run the business on an ongoing basis.

We will now show you have to finance that franchise. First of all, ensure you have a proper cost breakdown. That should be broken down into soft costs and hard costs. Soft costs are typically items such as the franchise fee, etc. The real hard costs are the assets and leaseholds and equipment you are purchasing, which should be broken into those three categories.

As much as clients hate to do it, you need a business plan that describes you, your experience, the business, its potential. When you address the key issue of how to finance a franchise you must demonstrate in the financial section how your loan or newly acquired debt will be repaid. If you don’t have experience in preparing such a plan an expert can prepare one fairly economically - we view it as a true investment in financing franchise businesses.

So who exactly is in the franchise financing business in Canada from a lender perspective? One guy is BILL. That's an attempt at humor, as the BIL program, formally known as the Business Improvement Loan program is by far the largest funder of franchise in Canada. That program, coupled with some specialty lending in the areas of equipment and working capital allow you an excellent chance to get your franchise financed.

In summary, when addressing how to finance a franchise in Canada know your costs, summarize your proposal in terms of yourself, the business, and its financial potential, and ensure you are in a position to present the transaction in a professional manner to an experienced franchise financing lender. Speak to a credible, experienced and trusted Canadian business financing advisor if you need assistance in your entrepreneurship financing goals in franchising.
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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/how_to_finance_a_franchise_franchise_financing.html