Franchise Business Loans In Canada. What You Can And Can’t Finance With A Franchising Loan

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Avoid Doing Something Wrong With A Franchising Loan 

 

 

Franchise business loans in Canada.  Can the prospective franchisee avoid doing something really wrong when arranging their franchising loan? We think we can help clarify, so let's dig in.

 

 

PICKING YOUR FRANCHISE / FINANCING YOUR FRANCHISE PURCHASE

 

While a lot of entrepreneurs focus on the particular business or industry segment they are looking to participate in they sometimes sorely miss looking at how the franchise financing industry operates. It's somewhat of a given that it’s up to you to pick the franchise that best suits your talent, expertise, and budget.  But when it comes to financing your business are you 100% sure of the expectations of your lender or lenders.

 

If there is any good news is that you do have some solid options available to yourself when financing your new business.

 

  

KEY ELEMENTS OF A  FRANCHISE LOAN FINANCING   

 

What exactly are some of the key elements of any franchise finance scenario? Well, they include the franchise fee, equipment, leaseholds, working capital, and ongoing capital and cash flow needs.

 

 THE NECESSITY TO FINANCE LEASEHOLD IMPROVEMENTS 

 

Leaseholds are one of the most misunderstood aspects of the franchise finance mystery or conundrum.  Typical leaseholds might include construction, HVAC, plumbing, lighting drywall, etc. If your franchise is not going to be fully financed by a specialty franchise lender then the best solution to financing leaseholds is under the auspices of the Govt small business loan program, In fact, this program was designed solely for two asset categories - equipment... and the leaseholds we have been talking about.

 

In certain cases, the franchise lender may wish the co-operation of your landlord when it comes to what is understood as collateral in the terms of your agreement with the landlord. The situation can sometimes become more complex if there is not clarity and understanding around certain assets that you as a franchisee may have thought was a leasehold improvement as opposed to assets that become attached to the building such as oven hoods, etc. (That’s in the case of restaurants, etc)

 

At the end of the day, it’s both the combined quality of the franchise you are buying as well as your own financial strength as determined by opening balance sheet and projected revenues and profits. Business plans and cash flow projections are a necessity in franchise loans - At 7 Park Avenue Financial we prepare a business plan for clients that meet and exceed the requirements of lenders.

 

If there is one continuous misunderstanding or misconception that we see in discussions with clients on franchise business loans it’s as follows: The franchisor rarely plays a key role in franchise finance. That’s your job or the job of you and your Canadian business financing advisor. At the end of the day, your goal is simple - you want to be in a position to raise the right amount of capital you need to open and develop your business for success. Only the smallest percentage of franchisors in Canada offer any real tangible financing assistance.

 

  

4 TYPES OF FRANCHISE LENDERS  

 

Who are in fact the lenders you should be working with when arranging your franchise loan? In broad categories they are:

 

SPECIALTY FRANCHISE LENDERS

THE GOVERNMENT SMALL BUSINESS LOAN (very well suited to franchise finance) These loans are somewhat similar to U.S. ' sba loans'

EQUIPMENT LESSORS - They finance equipment and in some cases leaseholds

CANADIAN CHARTERED BANKS - Ongoing working capital and cash management -

 

The reality is for many franchises the type of loan you need may in fact be a cobbling together of a number of different finance solutions. In some franchises, there may even be a real estate component that can be often addressed separately.

 

Important to note also that you can buy a new franchise or one being sold from a franchisee that is selling, with the approval of the franchisor of course.

 

DO BANKS REALLY FINANCE FRANCHISES? YOU DECIDE!

 

Since our theme is ' avoiding doing something wrong ' in franchisee finance it’s important for us to clarify bank loans in this industry segment. While a bank would consider financing your business directly it would place heavy reliance on your equity in the business, your personal credit, and collateral that you might have in savings, your home, etc.  In our opinion where the banks do a better job is in the underwriting of the BIL loan when it comes to direct franchisee finance. Franchisees should ensure they can demonstrate a good credit score in personal finances as well as a reasonable net worth , which will also affect the interest rate they can achieve. Interest rates are at an all-time low for every type of business financing and won't vary greatly in most franchise funding alternatives .

 

  

CONCLUSION  

 

To avoid making tragic, costly and time wasting mistakes in a franchising loan consider seeking and speaking to a trusted, credible and experienced Canadian business financing advisor who can asset you with franchise business loans that make sense for your future investment  and success.

 

 

7 Park Avenue Financial :
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Email = sprokop@7parkavenuefinancial.com

http://www.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.

' Canadian Business Financing With The Intelligent Use Of Experience '

ABOUT THE AUTHOR

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

Franchising Finance Canada : Don’t Settle For Less In Franchise Business Loans

Feeling Out Of Control On Franchise Business Loans ?

OVERVIEW – Information on critical elements of franchise business loans in Canada. Franchising finance in Canada requires specialized focus and knowledge

Franchise business loans in Canada can easily give the Canadian franchisee that ' out of control ' feeling when financing is needed. So when it comes to franchising finance where does one go to, who can you count on for assistance? Let's dig in.

Top industry experts tell us that over 30% of those folks considering purchasing a business in this industry rarely consider at the outset the financing and cost of the business!

Even more so of a predicament is that the average franchisee considers ' the bank ' as the logical (only?) source of capital for their business purchase. The reality? It's that very few franchises are financed by banks in a direct manner. Many are financing in an ' indirect' manner, more about that one a bit later.

So who then is doing the financing in this industry? Unlike our counterparts in the U.S. financing solutions for purchase of a franchise hardly abound, but the good news is that that are still available - you just have to know the lay of the land.

Certain specialty franchise financing firms have major programs in place for specific franchisors. More often than not these are ' tier 1' type names for major brands with strong brand recognition. If your business purchase does not fall into that category you're immediate challenged?

We spoke of an ' indirect ' manner to finance your franchise via a bank. That is achieved under the CSBF program that is sponsored /administered by INDUSTRY CANADA, a branch of the Cdn government. Commonly called the ' SBL ' Small business loan this program is run by the banks but the majority of the loan is ' guaranteed ' by the government.

While we think it's a great program for franchising loans our problem with the SBL loan is that each bank has their own twist and interpretation on the requirements. So it's incumbent on the franchisee to ensure they have the knowledge, or the help of an advisor, to maximize success in financing approval under this program.

Going it alone in business is never a great feeling, especially in start up or business purchase mode, so don't forget to draw on the experience of your contacts with a lawyer, accountant, a business advisor, etc. It's their skill and expertise that will change losing to winning.

Financing can also be significantly complemented via equipment financing, working capital term loans, working capital credit lines, etc.

Don't forget also that an existing franchise can also be financing in much the same method as a start up/turn key scenario. In some cases it reduces risk as you have access to financial statements, asset lists, etc of the existing owner. Naturally the approval of the franchisor is also required.

So, bottom line? You don't have to settle for less when you've got some knowledge and experience behind you. Eliminate that ' out of control' feeling in financing a franchise - seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist you in your franchising finance needs.




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 FRANCHISING LOAN EXPERTISE



Have A Question /Comment On Our Blog Or Canadian Business Financing Alternatives ?

CONTACT:

7 Park Avenue Financial

South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Direct Line = 416 319 5769

Office = 905 829 2653



Email = sprokop@7parkavenuefinancial.com


' Canadian Business Financing With The Intelligent Use Of Experience '































Stan Prokop

Franchising Loan Taking Too Long ? Franchise Business Loans In Canada

What It Takes For Successful Franchise Funding

OVERVIEW – Information on franchise business loans in Canada . Challenges related to a franchising loan can be overcome with the proper mix of information and expertise




Franchising business loans in Canada often come with a timeline experience that most franchisees have a huge problem in overcoming. How can that timeline for ultimate franchising loan success be shortened? Let's dig in.

Whether the potential franchisee is either purchasing a turnkey operation, or looking for a ' refranchising ' opportunity (i.e. buying an existing business) it’s all about getting approved. In certain cases the type of business opportunity that you purchase will affect financing approval - that might be either for the size of the transaction (too small / too large) or in some cases the type of business you are looking at.

Top experts tell us that currently businesses in the health care and hospitality sectors are ' hot ' - but the multitude of franchise opportunities out there continues to be enormous. The industry itself powers close to half the economy according to some pundits.

The shortfall that a franchisee faces when it comes to a total financing package often comes from owner equity. This certainly makes it even more difficult for entrepreneurs looking to purchase multi unit operations.

Rarely does the franchisor in Canada offer financing options - they sell franchises, they don't finance them - with their franchise fees and royalties helping to financing the expansion of their network.

In certain cases larger well known franchises with broad geographic exposure in Canada have aligned themselves with Canadian banks to offer a finance program. However this by no means guarantees approval and traditional lending criteria still applies. If franchisors were a bit more serious about assisting in the financing process some solutions might be lower franchise fees, royalty flexibility, subsidized financing, etc. Safe to say that probably won't happen!

Three basis finance solutions are available to the franchisee - they include:

Specialty franchise financing

The Govt CSBF loan

Supplemental financing by a variety of commercial financing firms offering equipment financing, merchant cash advances, working capital term loans, etc.

One or a combination of any of the above solutions will start your journey to financing success with the shortest timeline possible. At the end of the day it’s about expertise and information available to the borrower that will ensure faster credit approval.

Information that helps shorten your approval timeline includes a proper loan package that consists of owner personal financial info, a business plan or strong exec. Summary, a cash flow and loan repayment forecast, and pertinent information relating to the franchise you are purchasing regarding franchisor history/prospects.

If you are focused on fast and successful franchising loan approval seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success
who can shorten timelines and ensure you are aware of all options.






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 :


http://www.7parkavenuefinancial.com/franchising-loan-franchise-business-loans.html




Have A Question /Comment On Our Blog Or Canadian Business Financing Alternatives ?

CONTACT:

7 Park Avenue Financial

South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8


Direct Line = 416 319 5769

Office = 905 829 2653



Email = sprokop@7parkavenuefinancial.com


' Canadian Business Financing with the intelligent use of experience '

Stan Prokop

Franchise Business Loans In Canada . What You Can And Can’t Finance With A Franchising Loan

Avoid Doing Something Wrong With A Franchising Loan


Information on franchise business loans in Canada . What part of your franchising opportunity can be financed via a loan and where does the franchisee go to seek proper franchise finance advice?



Franchise business loans in Canada. Can the prospective franchisee avoid doing something really wrong when arranging their franchising loan? We think we can help clarify, so let's dig in.

While a lot of entrepreneurs focus on the particular business or industry segment they are looking to participate in they sometimes sorely miss looking at how the franchise financing industry operates. It's somewhat of a given that it’s up to you to pick the franchise that best suits your talent, expertise, and budget. But when it comes to financing your business are you 100% sure of the expectations of your lender or lenders.

If there is any good news is that you do have some solid options available to yourself when financing your new business.

What exactly are some of the key elements of any franchise finance scenario? Well, they include the franchisee fee, equipment, leaseholds, working capital, and ongoing capital and cash flow needs.

Leaseholds are one of the most misunderstood aspects of the franchise finance mystery or conundrum. Typical leaseholds might include construction, HVAC, plumbing, lighting drywall, etc. If your franchise is not going to be fully financed by a specialty franchise lender then the best solution to financing leaseholds is under the auspices of the Govt small business loan program, In fact this program was designed solely for two asset categories - equipment... and the leaseholds we have been talking about .

In certain cases the franchise lender may wish the co operation of your landlord when it comes to what is understood as collateral in the terms of your agreement with the landlord. The situation can sometimes become more complex if there is not clarity and understanding around certain assets that you as a franchisee may have thought was a leasehold improvement as opposed to assets that become attached to the building such as oven hoods, etc. (That’s in the case of restaurants, etc)

At the end of the day it’s both the combined quality of the franchise you are buying as well as your own financial strength as determine by opening balance sheet and projected revenues and profits.

If there is one continuous misunderstanding or misconception that we see in discussions with clients on franchise business loans it’s as follows: The franchisor rarely plays a key role in franchise finance. That’s your job, or the job of you and you Canadian business financing advisor. At the end of the day your goal is simple - you want to be in a position to raise the right amount of capital you need to open and develop your business for success. Only the smallest percentage of franchisors in Canada offer any real tangible financing assistance.

Who are in fact the lenders you should be working with when arranging your franchise loan. In broad categories they are:

SPECIALTY FRANCHISE LENDERS
THE GOVERNMENT SMALL BUSINESS LOAN (very well suited to franchise finance)
EQUIPMENT LESSORS - They finance equipment and in some cases leaseholds
CANADIAN CHARTERED BANKS - Ongoing working capital and cash management

Since our theme is ' avoiding doing something wrong ' in franchisee finance it’s important for us to clarify the bank role in this industry segment. While a bank would consider financing your business directly it would place heavy reliance on your equity in the business, your personal credit, and collateral that you might have in savings, your home, etc. In our opinion where the banks do a better job is in the underwriting of the BIL loan when it comes to direct franchisee finance

To avoid making tragic, costly and time wasting mistakes in a franchising loan consider seeking and speaking to a trusted, credible and experienced Canadian business financing advisor who can asset you with franchise business loans that make sense for your future investment and success.


7 PARK AVENUE FINANCIAL
CANADIAN FRANCHISE BUSINESS LOANS EXPERTISE





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 :

Canadian Franchise Financing















Stan Prokop