Canadian franchise finance – the upside and downside issues!
Information on financing franchise opportunities IN Canada . What the franchisee needs to know about a franchising loan
Financing franchise opportunities in Canada. That brings to mind one of our favorite old expressions - ' tuition is very high in the school of experience'! That's why when we talk to clients about franchisee loan financing in Canada we're often cautioning against what can go wrong as much as what can go right . Makes good business sense, right?
There is no arguing of course that franchise finance in Canada is still booming, the general malaise in the economy notwithstanding. From our perspective we are even optimistic about the finance landscape out there when it comes to financing your franchise.
One thing we can say is that your options on financing your Canadian purchase of a new or resale franchise are hardly unlimited. In reality there are actually down to self financing, getting some sort of assistance from your franchisor ( doubtful in most cases ) and either utilizing the government CSBF program or the services of a specialty franchise finance firm . In some cases what we term as complimentary financing is available, that might come from an equipment and leasehold financier, or a true working capital loan from a regulated financial institution.
In many cases either some initial or ongoing financing for franchises is done via personal and corporate credit cards for your new busines. This clearly is a double edged sword, in that while it provides some capital for either assets or working capital needs but comes with the higher rates that we associate with credit card debt.
Additionally we always recommend that the franchisee make a strong effort to separate his business life from his or her personal life when it comes to finances. Almost everyone agrees that one of the prime drivers for incorporating your business is the reduction of personal liability - as all business is a risk. (Naturally some are more riskier than others as we have seen over the years!) On balance it would certainly be better to acquire a corporate card for your business as opposed to a personal card - just common sense, right?
Many new franchisee ' newbie’s' don’t often consider the concept of ROI when they enter into their franchise agreement. The reality is that whether its a franchise or any other business you can't afford not to wrestle down this concept, Its all about carefully analyzing how much you need to put it, what amount of sales and revenue you need to at a minimum break even, and finally, and certainly as important, what level of profit, including your salary of course will be a satisfactory return on your business.
Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in covering off the risk and reward of a franchise loan when you're assessing those Canadian franchise opportunities 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_franchise_opportunities_canada_loan.html
