Financing For Franchising Opportunities In Canada : Is A Franchise Finance Loan Science .. Or Art?

‘ Who You Gonna Call’ When It Comes To Financing For Franchising In Canada?

OVERVIEW – Information on financing for franchising in Canada . What are the key ingredients of a franchise finance loan when entrepreneurs seek opportunities as a franchisee



Financing for franchising in Canada is often viewed as a ' who you gonna call ' situation for many prospective franchisees' in Canada. We're ourselves still not sure whether a total solution financing package for a franchise purchase is an art of a science - in fact it’s probably a bit of both.

And frankly more often than not they are ' flying solo’ when it comes to their search for a franchise finance loan. There are some reasons for that, so let's dig in.

We recently read a great article by a Toronto franchise lawyer who reaffirmed (thankfully!) what we have been saying for a long time. Some of those key points included:

A decent chunk of the equity in a new franchise needs to come from the borrower

Franchise finance scenarios differ from many forms of traditional financing because there are numerous aspects: franchise fees, leaseholds, working capital, assets, technology, and in some cases real estate

The type of financing you are going to receive also has a lot to do with your overall personal net worth and personal credit score at the credit bureau

While Canadian chartered banks are viewed as the most logical ' go to ' source for financing in fact this is somewhat misunderstood given that the majority of loans approved for franchises are under the auspices of the Canada small business financing program - which is a government guaranteed loan .

So, while the upshot of the article was clearly, and we quote ' they will likely be on their own when it comes to financing ‘the franchisee shouldn’t despair. Why? Simply because if you have the help and assistance you need from a 3rd party non biased source there are a number of ways to solidify financing for franchising.

Those methods include:

Specialized franchise loan financiers

The Govt SBL program

Supplemental financing via cash flow term loans, equipment financing, and merchant cash advances

The one spot most franchisees think they will get the most help will in fact be where they get the lease help. Thats because franchisors are interested in selling you a franchise, helping you run it via their business models, but are not interested, ( or able) to assist you . Here it might make maximum sense to seek out the expertise of a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist you with making your business opportunity a total 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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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

Are You A Franchisee Looking For a Franchise Finance Loan . Here’s Franchising Capital 101!

How To Finance A Franchise


OVERVIEW – Information to franchising finance in Canada . Here’s what a franchisee needs to know to be successful in getting a franchise finance loan for his or her new business opportunity




Isn't the scary

part of getting a proper franchise finance loan in place the fact that you've already spent a ton of time, and probably some money in addressing your project? That of course means you have probably covered off already key issues such as researching franchise trends, choosing the franchisor with which you wish to become aligned with, checking out industry trends and competition... and on it goes.

So with all that good staff work behind you it must seem daunting to know that getting franchising financing might still be your biggest obstacle. Not necessarily though, so let's discuss.

If you are focused and can address 4 or 5 issues surrounding your potential purchase and financing you are going to have a lot less of a challenge than you think.

The first key issues is that of ownership equity, aka the proverbial ' down payment '. Every client we talk to seems to want to know the minimum amount of capital they can put into the transaction. Surprisingly though we even see the other extreme where some business entrepreneurs are prepared to risk it all and pay cash for their franchise - often collapsing savings or taking mortgages on their homes.

So our key point on that issue - if we had to summarize we would say that somewhere between a low down payment and a 100% cash purchase is probably what you want to be focusing on. You're never going to be successful with 100% debt, and the reality is that no financing is in fact available on the ' OPM ' concept - i.e. 100% other peoples money! Over the years we met franchisees who have told a sad tale of losing it all, personally, after their business failed and they had pledged all personal assets.

We would add that the Canadian govt business loan, aka the BIL/CSBF program requires that you provide only a limited guarantee of 25% of your entire borrowings. That as well as good rates and flexible terms make it a prime candidate to research when you are looking for a financing facility for your transaction.

Another key issue that we always focus on is the concept of doing a bit more planning around how financing will work after you have closed your transaction. So a proper business plan and cash flow that you'll need should also stay focused on how the business will address wages, how much salary you will draw, covering the franchise royalty fees in your agreement with your franchisor. Typical royalty fees we see seem to be in the 6-8% range, sometimes more, and can take a significant chunk of your profits and cash flow.

One of the ways that you can address on going working capital, other than wrestling with your spreadsheets.. is to discuss carefully with the franchisor and other current franchisees as to the ongoing capital and expansion requirements of your business.

Many business owners start with modest drawing of salaries when they start a business. A franchise scenario, at the end of the day is still a start up. Yes, its a proven business model with a good chance of guaranteed revenues, but at the end of the day its as close to a start up as you can get, so budget accordingly for your personal needs relatives to a salary, living expenses, etc.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in addressing the key issues of franchise finance success 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 10 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/franchise-finance-loan-franchising-franchisee.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

















Stan Prokop