How To Get Franchise Financing In Canada

Tweet

How To Finance A Franchise In Canada

 

 

Financing a franchise and the purchase of that business is no doubt on of the larger decisions in the entrepreneurs life. It is safe to say that when we meet potential franchisees at 7 Park Avenue Financial they want some solid options on funding and financing their new business.

Franchise loans in Canada to some extent are limited vis a vis who finances these businesses - it is therefore important to know who the players are and what lending options are available from franchise lenders.

Business people can be forgiven when they seem skeptical around whether franchises can be easily financed in the current business environment . After the 2008-2009 worldwide recession business loans of all type in many ways became more difficult to access. The bottom line though is that funding is still available, and the lending criteria and solutions are not as demanding as they might think.

No business loan is a cake walk - therefore the preparation in the franchise loan process is key to ultimate financing success.

 

How Does Franchise Financing Work ?

The way we like to look at the ' being prepared ' process is essentially in two key categories - having a strong proposal and ensuring you can meet the basic qualifications for the franchise loan . And by the way, that also means being able to prove you have some solid business experience. Keeping up your part of the bargain is also key ! What is that?

It's your equity investment of down payment into the business, the balance coming from your franchise finance loan funding. Suffice to say that there is typically no 100% financing in this area of Canadian business.

One key aspect of franchise risk is that fact that it is probably actually more easy to secure business franchise funding than any other normal start up since you have the benefit of a ' brand ' and ' reputation' backing you .. I.e. the Franchisor.

When it comes to your ' deposit ' or equity position in the loan these funds typically come from various parts of your 'net worth '. While you may think that you have to tap into major savings or home equity, or collapse RRSP's, the reality is that you need to come up with anywhere from 20-40% , generally speaking , of your desired loan amount.

Personal credit history is also a key aspect of the franchise loan .Unfortunately, and we run into this almost all the time, many franchisees don’t have a sense of how the franchise funding lenders assess their personal credit history. It's more simply than you think. The entire personal credit history of everyone in Canada comes down to a numerical score at the credit bureau. Borrowers can easily check their credit scores with a local credit bureau, and by the way the 'magic score ' in most business loans is 650. Poor credit histories make it close to impossible to achieve almost any type of business loan, including franchise loans.

Next steps generally revolve around assessing your financing options. For some of the larger franchise chains one or two well known independent finance companies can handle all your franchising needs from a lending / loan viewpoint. But, here’s the kicker, the majority of franchises in Canada are funded by the Government Small Business Loan program .

Key benefits of the loan include:

Flexible rates

Terms of 2-5 years

Attractive structures including some pre payment and interest only options,

Low personal guarantees - typically 10% of the loan

Naturally you want to expedite your transaction. That is done by ensuring you have a crisp business plan and financial forecast in place - highlighting your business experiences, profit and cash flow potential, and info on the success of your franchisor as your new partner in Canadian business. You simply want to focus on one thing, showing your ability to repay the franchise loan.

Supplemental financing can also be achieved quite creatively if you have the right assistance - that might come in the form of a merchant advance loan against future sales, equipment leasing, or a straight unsecured working capital term loan.

Franchise Finance Options In Canada

So the good news is you have some great options in franchise finance and financing your new business. It’s up to you to assess those options, be prepared to present your plan. Want some great assistance? Seek out and speak to a trusted credible and experienced Canadian business financing advisor with a track record of business finance success in franchise finance funding.


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


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.
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 finance executive 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.


Stan Prokop

How To Finance A Franchise In Canada

Tweet

Can You Finance A Franchise ? Yes You Can !

Canadian entrepreneurs continue to explore franchise acquisitions in Canada as a way to maximize on the business opportunities provided by the franchise industry. Entrepreneurs evaluate franchising because it provides them with an ability to generate sales and profits from established business models – they can build equity in businesses and enjoy the benefits (perceived or otherwise!) of self employment and the entrepreneurial dream



As you start to formulate your ideas around purchasing a franchise the concept of how o you will finance your new business should be very close to the top of your list. Many clients we talk view the actual financing of the franchise as the largest obstacle to achieving self employment success.


The reality is that anyone with a reasonable business and work background, coupled with a stable financial situation (good credit bureau history, etc) should be able to successfully finance their venture.


Is there a secret to franchise financing in Canada! Yes, there is, and don’t by surprised by the answer , which is simply that you must have a thorough and solid proposal in hand, and the right people need to see that proposal. Unfortunately that isn’t as easy as it seems when you searching for franchise loans,


Sohow are franchises in Canada actually financed? During the last couple years, due to the world wide economic slowdown/recession franchise financing became a smaller fish bowl so to speak. The methods in which franchises were financing in some cases actually disappeared, and in most cases simply had the ground rules changed relative to whats required and how its works and how long it takes.


In Canada franchises are financed by, in most cases a government sponsored and subsidized loan that comes under a program known as the CSBF loan program. Additional a very select number of firms offer specialized franchise financing loans, and in our experiences we have complimented these two programs with basic lease financing of assets plus in most cases a working capital cash flow loan or an introductory line of credit to facilitate daily operations and long term growth.


So is there a key to success in franchise finance ? I Absolutely, and it starts with a solid executive summary and business plan that has some reasonable financial projections and assumptions attached to it. That is one critical key to understanding franchise loan requirements . The basic elements of that document are the business description, an overview of the basic business model and industry, financial projections, and a focus on the strengths of your business and its expectations of profits. Those profits will of course be cash flow to repay your franchise loan and debt.


We recommend to all clients considering and entrepreneurial career as a franchisee in Canada to discuss your franchise financing options with a credible and experienced advisor in franchise financing, sometimes known as a franchise loan broker .Keep your financing objectives at the very top of your list early on in your process, plan well, and present your proposal once, and properly. You will soon be en route to a successful new business with sales and profit growth!





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


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.
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 finance executive 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.



Stan Prokop

Franchising Loan? What’s the Difference Between Franchise Finance And Other Business Loans?

Looking for The Complete Story On Franchise Loans?


OVERVIEW – Information on franchise financing in Canada . Exploring the differences between business loans in general and a franchising loan for the would be franchisee.



It's a great client question: What in fact is the difference between a franchising loan and a regular business loan

when it comes to arranging franchise finance in Canada?

The answer? There are some differences, but you just might be surprised at the similarities when it comes to comparing the two. Let's explain.

When it comes to the ' players ' in your finance loan, it’s pretty simple. Contributions are required from you, and your lender / lenders! In Canada those lenders are specialized franchise financing firms, banks, and third party commercial finance companies. While it is extremely difficult in Canada to obtain full financing for your franchise via a Canadian chartered bank the good news is that thousands of franchises are financed via the Government Small Business Loan which can provide funding up to $ $350,000. That's not chump change! . And when you hear what rates and terms and structures are required you'll be even more pleasantly surprised.

Clearly franchising fits into the area of the SME sector of Canada, and for that reason a lot of the challenges that the franchisee faces revolve around the same issues faced by any other start up. Yes , we agree that you're acquiring ( hopefully ) a proven business model but the early stage financing required to get you to a turnkey ' in business ' stage is still viewed as placing a heavy onus on the entrepreneur to come up with a decent portion of the capital yourself .

Franchising, as well as any other type of business requires two key components for initial capital... a ' plan ' and ‘management expertise ". And that plan by the way is known as the ' business plan ' - which is simply your well thought out road map to financial and operational success.

The type of financing that you obtain when you finance a franchise revolves specifically around ' use of funds ‘, another common term for any other business financing. In your case that might be real estate, construction, equipment and fixtures, leaseholds, and some opening inventory if you have a product as opposed to a service franchise.

We mentioned the Govt business loan previously as a great conduit to get you approved for your new business. But we point to out clients that that loan program only covers equipment and leaseholds, so items such as the franchisee fee and opening inventory are not financeable. We wish they were... but they're not!

We have referenced the fact that while Canadian banks provide millions every year for entrepreneurs in the franchise sector via the specialized BIL loan, they in general are reluctant to finance the business outside the Govt program. So discussions around bank financing quickly gravitate to personal collateral, home equity collateralization, etc. It's simply not the optimal way to go if you want to separate your business life from your personal life.

Another strong similarity in franchise finance when

compared to other business financing is the fact that a strong emphasis is placed on your personal financial history. This is typically documented by your credit report and a solid amount of emphasis is placed on this report. In Canada this report is in effect a scoring system and a good score of ' 650’ is required.
Simply speaking, the bank or any other commercial lender wants to know you will run your own business in the same manner as you have arranged and run your personal finances, and that of course makes sense - especially if you're the lender!

So as we have seen many of the concepts and lender views around any business finance loan or proposal pertain to franchise finance, with some nuances / differences. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor for franchise finance assistance.

7 PARK AVENUE FINANCIAL
CANADIAN FRANCHISE FINANCING 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 :

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

This Just In! Get Rid Of Franchise Finance Fear Once And For All . Financing Franchising Opportunity In Canada

Financing A Franchise In Canada – Don’t let fear of the unknown stop you now!

Information on franchise finance in Canada . How the Franchisee can overcome fear of financing franchising opportunity with the right info and strategy .




Franchise finance in Canada. The good news is that when it comes to financing franchising opportunity in Canada there are some proven methods for removing the ' fear ' or concern about not being approved for the purchase finance of your new business.

At the core of every successful franchise finance transaction in Canada is a solid business plan. And although you use this plan for financing the reality of it is that it has a lot of other value also. Most franchisors that have credible organizations in Canada, or who are U.S. owned can in fact provide you with some solid general assistance in the area of what should be in that plan .

Also, don't be fazed about the cost or time involved in putting together such a plan if you don't have a financial background. The cost of a crisp decent plan is in fact quite moderate and one can be completed in a relatively short period of time.

We find a lot of prospective franchisees have talked a lot about buying the franchise, and how much money they will make, while at the same time haven’t discussed the franchisors experience in their network of units in Canada when it comes to financing their stores. Oh, and by the way, we're even more surprised by many franchisors who don’t qualify their franchisees with respect to general credit worthiness, or net worth or business experience, but that’s another topic for another day. It would appear to us that if you're a franchisor you're only as strong as your weakest link!

Many franchisees in Canada have a fear of financing approval simply because they don't understand their options. There are only 4 options in Canada, and if you arent aware of all of them then we can certainly commiserate with you when it comes to being doubtful for financing success.

Oh, and what about those 4 methods. They are as follows:

You can self fund the entire transaction - not recommended, but if you can we're jealous!

You can use the vehicle in which thousands of franchises are financed - the Canadian government BIL/CSBF program

You can fund via a specialized commercial finance firm that specializes solely in financing franchising opportunities with well known franchisors

You can use a combination of any of the above scenarios and compliment that with equipment financing, merchant financing, or a traditional working capital term loan.

The key to a successful transaction is pretty simple, and it will remove all your fears if done properly. It’s to understand the level of personal financial commitment that you can bring to the table, along with planning venture with a proper business plan, and finally, soliciting the help of an experienced, trusted and credible Canadian business financing advisor who can assist you with the steps involved.




7 PARK AVENUE FINANCIAL

CANADIAN FRANCHISE FINANCING 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 :

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

Creative Ways for Franchise Finance In Canada. From IT Franchises To Restaurant Franchising Here’s How !

Avoid The ‘ Wait & Hope ’ Of Franchising Finance In Canada


Information on franchising in Canada . From IT franchises to a restaurant you need a clear franchise finance success plan




Franchising Canada. Whether it’s an ' IT ' franchise in the world of technology, or a restaurant in the quick service / full service/ casual service industry everyone it seems wants to get on board. If they know they have the ability to finance the business...so let’s examine some creative ways in which to complete the financing of the entrepreneurial dream.

It's no secret to the potential franchisee that it's all about cash - a combination of your own and borrowed funds. What are some of the methods that clients use to creatively, yet sensibly finance the franchise dream in Canada.

Every business in Canada, new or existing, has two components to the capital structure. Debt... and equity. Equity is of course your portion; debt is of course that contributed by your lender or lenders. And remember, you have the upside potential in equity... your lender has only the interest income, and the hope and belief that they will be paid in full.

That's one of the reasons that many franchisee ' newbie’s' in fact get overly enamored with the financial potential of their business when pitching a franchise finance scenario. We think they would do better often to tone it down a bit and focus more on the lenders ability to feel comfortable that cash flow will cover the loan or loan payments.

In talking to clients over a long period of time we've been intrigued by the manner in which customers come up with their portion of the funds, the equity. Sometimes it's savings, other times they are leaving corporate life and utilizing their severance from the previous employer.

In other cases there is ' friends and family ' - we see that a lot. In order to be truly creative in using funds from friends and family (it hasn’t escaped us that they are in fact your ' angel investors;) you need to be sure these funds arent documented as formal debt - otherwise your banker or lender will have to show this on your personal balance sheet as debt, which will affect some of your borrowing ratios.
Supplementary to this strategy is getting a minority operating or silent partner in the business. Giving up a small amount of equity, say 5-10% might induce a family member or third party to help you out.

Typically the collapsing of registered savings plans is viewed by most as not, we repeat, not the best way to finance a franchise. Two reasons here actually, one is the huge tax bite involved in such a move; the other is simply that you have put your savings at risk, which clearly is not optimal.

Other creative ways to compliment franchise financing in Canada are to consider supplementary forms of financing such as equipment lessors for certain assets, or merchant receivable firms for ongoing cash flow. They are complimentary to your overall finance strategy.

Is there one way to really move along quickly in franchise finance in Canada? How about a co- signer, and boy do we have one for you. It's the government of Canada, via Industry Canada’s BIL program, with the government in effect guaranteeing a huge portion of your loan in the franchising Canada environment. Don't overlook that one!

So, a service franchise, such as in the IT (information technology) industry, or a restaurant... it’s your call when it comes to selecting and finalizing the franchise dream. Just make sure you have considered all options, traditional and alternative when it comes to ' creative ‘.

Speak to a trusted, credible and experienced Canadian business financing advisor for franchise finance advice that gets you to the goal line of 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/franchising_canada_it_restaurant_franchise_finance.html

Canadian Lenders In Franchise Finance – Lending & Funding Options For Franchisee Financing

Wouldn't it be great to know that after you made one of the largest decisions in your business life - (buying a franchise business) that you had some solid options and tips around acquiring the business?

Let examine the current state ( we always work in the real world ) of franchise finance in Canada - who are the lenders in franchising and what funding and lending options might work best for you .

Many clients that approach us seem automatically skeptical that franchise finance can be easily achieved in the current Canadian business environment. No doubt they can be forgiven as its been a couple tough years with respect to the financial implosion (2008-2009), recession, etc. So boy do their eyes light up when we assure them that franchise finance financing funding is still available, and the lending criteria and solutions are not as demanding as they might think.

On the other hand though, what part of business is not a ' cake walk ' .Almost none, right. Therefore your ability to be prepared is critical.

We can generally put the idea of being prepared into two categories - having a strong proposal, and ensuring also that you are prepared to keep up your half of the bargain with your funding partner. Whats that part of the bargain? It's your equity investment of down payment into the business, the balance coming from your franchise finance loan funding.

Think about it... in many ways it is probably actually more easy to secure business franchise funding than any other normal start up since you have the benefit of a ' brand ' and ' reputation' backing you .. I.e. the Franchisor.

We encourage all clients to start assessing their financing options way in advance of their franchise final decision. While you may think that you have to tap into major savings or home equity, or collapse RRSP's, the reality is that you need to come up with anywhere from 30-40% , generally speaking , of your desired loan amount.

Unfortunately, and we run into this almost all the time, many franchisees don’t have a sense of how the franchise funding lenders assess their personal credit history. It's more simply than you think. The entire personal credit history of everyone in Canada comes down to a numerical score at the credit bureau. The magic number you need is 650 (or more!). You can easily check your score yourself.

Next steps generally revolve around assessing your financing options. For some of the larger franchise chains one or two well known independent finance companies can handle all your franchising needs from a lending / loan viewpoint. But, here’s the kicker, the majority of franchises in Canada are funded by the Government BIL program .It is absolutely the best deal in Canadian business, flexible rates, terms and structures, low personal guarantees, ability to prepay without penalty... bottom line it couldnt get any better .

Naturally you want to expedite your transaction. That is done by ensuring you have a crisp business plan and financial forecast in place - highlighting your business experiences, profit and cash flow potential, and info on the success of your franchisor as your new partner in Canadian business. You simply want to focus on one thing, showing your ability to repay the franchise loan.

Supplemental financing can also be achieved quite creatively if you have the right assistance - that might come in the form of a merchant advance loan against future sales, equipment leasing, or a straight unsecured working capital term loan.

So the good news is you have some great options in franchise finance and financing your new business. It’s up to you to assess those options, be prepared to present your plan. Want some great assistance? Consider working with a trusted credible and experienced Canadian business financing advisor in franchise finance funding.





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 .Info re: Canadian business financing & contact details :

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

How To Qualify For Franchise Financing In Canada – A Franchising Finance Business Loan That Makes Sense!

Tweet

Buying A Franchise?

What do I need to do to get to the goal line? That's a favourite client question when it comes to franchise financing in Canada. We're talking about a franchising business loan to finance your new business (or one that exists already which you're buying).

Franchise Finance

Information. Solid info that you want on the qualifications and process involved in getting approved for your franchise investment. Let's dig in.

Franchise Loans Canada

To say that franchise finance is a ' specialty' area of Canadian business financing is an understatement. There is a fundamental misunderstanding of how this type of finance works, the processes around it, and the risks that you can avoid by doing things properly... with some expert advice along the way.

Franchising In Canada

Is there a systematic way, or method that Canadian franchisees can use to get the financing they need? We think there is. Essentially it is really two very simple concepts, planning, and knowing the process. Simple as that.

Many new Canadian franchisee ' wannabees' view financing as an obstacle. We can forgive those clients sometimes because in the last few years any type of business financing has been a challenge, whether you're General Motors or purchasing a new franchise in the restaurant industry!

Many franchisees (mistakenly so) think the franchisor you are working with is either going to provide you with the financing you need or in some cases at least steer you in the right direction. They might do a bit of the latter, but let's be honest here; the franchisor's job is selling franchises, not financing them.

 Even various banks and other franchise lenders probably would like to see franchisors being more involved in the franchising finance business, but we simply don’t think that is going to happen.
Education. And guess what, we are not talking about educating you, we're talking on your need to be able to educate your franchise lender about why you are the perfect franchise financing in Canada candidate.

Financing A Franchise In Canada

And who are the franchise lenders in Canada? That's probably the main thing you wanted to know, isn’t it? There are 4 key franchise lenders in Canada. They are the Canadian chartered banks under a special program called the BIL/CSBF program, one or two very specialized franchise finance lenders ( they only do very large transactions ) , and thirdly some independent finance firms that offer equipment financing tailored specifically for the franchise industry.

But didn’t we say there were 4 lenders? We did. And we're pretty sure you know that 4th lender already. It’s yourself because your own equity portion or down payment into your business is viewed of course as a debt or a loan.

So what's the clear process in qualifying for franchise financing in Canada. Is there a clear road map you can follow? We categorically think there is. And here it is.

Identify the total franchise funding you need. Determine what amount of owner equity you are prepared to put into the transaction. Anywhere from 10 - 40% is typically required. Determine which of the 3 other methods of financing will allow you to cobble together a total solution to finance your new business.

Next step - prepare a package that includes a business plan, cash flow, info on yourself and the franchisor, with a focus on success and repayment of your debt. Along the way don't forget that you need reasonable personal credit history, and boy does some specific industry experience or general business knowledge help in confirming your future ability to be successful for a franchise finance business loan.

Focus on the best financing that matches your needs; we strongly recommend the BIL program which has great rates, terms, structures, and limited personal guarantees.

Going it alone. It’s possible. A better idea? Speak to a trusted, credible and experienced Canada business financing advisor on information and help on franchise financing in Canada. Next step = ' You're approved '!





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.









Stan Prokop
7 Park Avenue Financial/Copyright/2020

Canadian Franchise Finance Isn’t What You Think! Financing a Franchise Business Properly

Misconceptions. They are all over the place when it comes to financing a franchise business successfully, and properly. Let's wade into some of the key factors that allow you as an entrepreneur in the Canadian franchise finance industry to complete a transaction that meets your business and personal goals.

As noted, there is a lot of poor information out there about the challenges of financing a franchise in Canada. Let's focus in on whats important, whats achievable, and what you don’t have to worry about.

We can relate to clients who are making a significant life change and personal financial investment to purchase a franchise. You have access to some funds but the challenge of financing their new venture properly seems somewhat daunting.

Is there financial assistance in completing a franchise properly? Absolutely, but you must be prepared in every sense of the word.

Step one is often simply to properly identify the total amount of borrowing you need. Unfortunately we meet with some franchisees that have completed a franchise closing, only to find they are quickly running out of working capital to run their business on an ongoing basis. So close, yet so far.

The costs to finance a franchise involve what we call the soft costs to set up your business; they typically include franchise fees and professional fees such as those for an accountant, lawyer, etc. In our experience it makes strong sense for the owner to finance those soft costs themselves, leaving the hard assets and working capital for the franchise loan itself.

Here's something that surprises clients, as it appears to be a contradiction in terms. Canadian business financing itself is a challenge, but franchise finance is not! That is because they are some excellent programs that focus specifically on financing a franchise business. If done properly, and don’t quote us on this, it’s almost a ' slam dunk! A huge and we mean huge portion of all franchises in Canada are financed by a guy named Bill.

So who is Bill? Actually we have spelled his name wrong, because B I L is the acronym for the Government federal loan program that typically finances most of the franchises in Canada.

So you thought franchise financing under the BIL might be difficult or onerous. If properly presented and prepared you have just been approved for , bar none, the best small business financing program in Canada - great terms of 5-7 years, limited personal guarantees, and , are you ready, great rates and structures on the financing itself.

Is financing a franchise business easy or hard? Our simple answer to clients on that is that if you are prepared its easy, if not, you are guaranteed to fail.

Key elements of being prepared a business plan and cash flow that demonstrates your experience, the business potential, and, what the lender wants to see, cash flow to show repayment of the debt.

OPM doesn’t work in Canada almost anywhere in Canadian business financing. OPM is other peoples money, simply signifying that your own investment must be reasonable and shared with the loan investment to represent the full financing. To put is even more simply, you need a reasonable down payment. Franchisees with poor or derogatory personal credit histories need not apply in our opinion. Why? Because the lender views a franchise business in the context of how you have managed your own personal affairs.

So is there a bottom line on your quest for Canadian franchise finance success. Yes, and its pretty simple - avail yourselves of financing that is geared toward this type of business , be prepared from a presentation perspective , and commit a reasonable amount of your own funds to the transaction, sharing the risk with the loan provider .
Speak to a trusted, credible and experience Canadian business financing advisor on moving forward successfully, avoiding unnecessary surprises, and allowing you to finance the franchise dream successfully.

Can A Franchise Finance Business Loan Be Creative ? Here’s How Canadian Franchise Finance Works!

Is it actually possible to get ' creative ' when considering a franchise finance business loan for you new Canadian role as an entrepreneur in franchise financing? There are some tried and trusted rules we use in the franchise lending area, but a little creativity has never hurt anyone we believe!

If you haven’t considered how to finance your new business in the franchise industry then we feel it’s probably a little too late in some ways, as your ability to finance your business properly we think has a lot to do with the ultimate growth and success of your business. There are very focused lending sources for the franchise area of financing in Canada - the trick of course is to know what they are and more importantly how you can navigate the ' maze ' successfully.

The reality is that if you have some industry experience in your new business and a proper finance plan you have a much better chance of financing your business properly.

So, who can you turn to in terms of creativity and resources for franchise financing? Clients are amazed when we tell them the most creative partner in franchise financing in Canada is none other than the Canadian government !How could that possibly be? Simply because a program guaranteed by the government and administered by the banks could not be any more creative than this.

The program is the ' BIL ' loan program, and it provides you with financing up to 350k for your new business. Are the terms onerous? Hardly! The essence of the program is a 5-7 year term loan, with great rates, limited personal guarantees, and some other elements of flexibility. If that isn’t creative then we don’t know what is!

Naturally all the creativity in a business loan of that type for your franchise finance scenario should not be reliant on just one lender - the other lender is someone you know very well. Yourself. That's simply because when you look at the total financing of a franchise in Canada the two components are simply debt (the funds you have borrowed) and the equity, or money you have put in yourself. These equity funds, i.e. your commitment to the business, typical come from savings, the proverbial ' friends and family ' support, and investments or collateral that you have available.

Getting back to our key subject of creativity, our above noted BIL loan program only covers certain aspects of a franchise finance scenario. You can augment that loan with flexible equipment financing that has low down payments and extended amortization terms, as well as, in some cases, a working capital term loan.

We never forget to remind clients that the franchise financing plan is a two stage process, acquiring the business, and making sure they have some capital and funding to operate and grow their new business.

In summary, you can be creative when you are looking for info on how Canadian franchise finance works. You need knowledge on what funding sources are available that are specialized to the franchise industry, and assistance in executing a proper financial plan. Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in maximizing that creativity!

-


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/franchise_finance_business_loan_financing.html

New Franchisee? How Franchising Lenders work in Canadian franchise finance

Being the ' new person ' is not always beneficial, especially when it comes to a major life decision such as your new career as a franchisee in Canada. Not knowing about franchise finance or franchising lenders work is definitely a set back - so lets get you ' armed and ready ' with some solid info on financing your franchise .

First of all, here’s the good news - financing a franchise in Canada is certainly possible - It’s mostly done by a guy named BILL! And we're not kidding. More about him later.

In fact though, the franchise industry is currently viewed as quite healthy as lenders feel that the concept of proven business models and branding of your franchise are great steps to opening what ultimately is a ' start up ' business. Clearly we all agree a franchise ' start up ' is steps ahead of opening up your own business and ' taking a chance'.

So, can you get a ' standard’ bank loan to complete your franchise finance? We don’t want to be too sarcastic here, but the answer is, yes, if you have a million dollars net worth, pristine credit, and some outside collateral and guarantee ability. So what we are saying, putting that sarcasm aside, is that conventional lending doesn’t really work if you're a new franchisee seeking an independent business opportunity financing.

So, that brings us to our friend BIll, remember we told you he finances most of the franchises in Canada. Clearly a popular guy, as he finances millions of dollars of franchises. Our clients want to immediately get to know this Bill guy. So, who is Bill?

Actually we have spelled his name wrong, its BIL, because that is the name of the government sponsored loan programme in Canada (in the U.S. it’s called the SBA loan) that funds most franchisees in Canada.

How can one program be so popular? It's simply because it’s well suited to what you are trying to accomplish. It provides great rates, terms and structures, limited personal guarantees, and requires what we in our firm call a reasonable or decent personal credit history. I.E. You don’t need that million dollar net worth we spoke of earlier?

So how do you achieve franchise finance success with franchising lenders on the BIL loan? Again, pardon our humor, but investigate the Boy Scout motto - Be Prepared!

The essence of approval for your franchisee venture for franchising lenders under a BIL loan is a crisp business plan, a financial projection that makes sense, and various back up documents as required by the program. Naturally you also need assistance in determining who offers this loan program, how it can be sometime augmented with other financing, and it sure helps if you present it professionally and properly.

So, we always try to have a bottom line, and in this cases its pretty simple - investigate the BIL program, do your homework, identify key requirements, and, if you are challenged by any of the above seek a trusted, credible, and experienced Canadian business financing advisor who can help you achieve franchisee franchise finance success with the right franchising lenders for your BIL. And, by the way, congratulations on 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/franchise_finance_franchising_lenders_franchisee.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

What You Need To Know About Franchise Financing In Canada

Franchise financing in Canada has to work for you as the franchisee as well as your franchisor and of course your lender(s). How do you access franchise finance after you have made the critical decision to purchase a new or existing franchise – in many cases you may be fighting timelines and need to ensure that you have access to all the proper information about financing your business , and , more importantly, ensuring you have put together the best franchise financing package . Let’s examine some of those issues.

Financing is available for pretty well very type of franchise in Canada , and most people are very surprised to hear that franchising as a whole in Canada accounts for close to half of all our retail sales – that’s a staggering figure, so franchisors must be doing something right !

We are all probably keenly aware that many franchisors in Canada are in fact branch organizations of U.S. based systems. That is ok as long as your franchisor has an acceptable and successful franchise model. Financing for your Canadian purchase should not be affected by a U.S. ownership of your franchise system.

There are a couple of major questions that, if clarified early on in the process, will allow you to finance your new business in a successful manner. One of those key questions is whether your franchisor has a program in place that they either self fund, or perhaps work in partnership with a Canadian financier such a bank. However, in our experience we caution clients not to rely or think they will receive a huge amount of assistance, particularly financial, in setting up their business. There is one clear reason for that, the franchisor is in the business of selling franchises and using your funds to build the next one – that’s how it works, and there is of course nothing wrong with that.

What the franchisor can in fact do though is to give you guidelines around how their franchisees have been financed in the past, and provide you with sample breakdowns of financing needs. Financing needs for a franchise come in a couple concise categories – they include the franchise financing fee itself, equipment and leaseholds that may be required to open the business, and of course on going working capital .

On going working capital is a key point, imagine the disappointment or stress of financing a franchise for purchase and then slowly discovering you don’t have enough working capital to fund receivables, inventory, growth, equipment and expansion needs, etc .

Clients are always asking if financing a franchise in Canada is different from financing any other business. The answer won’t be one of your favorites – the answer is yes and no! Any business, franchise or not, requires a finance plan to purchase the business, a business plan to map out costs and growth, and ongoing working capital financing. In that manner franchise finance is similar to starting any business. Where it differs is that there are a limited number of ways in which a franchise is financed in Canada. It may surprise most entrepreneurs that banks and other lending institutions and firms view the industry fairly positively – we think that’s because there is strength in a proven business model, resaleability, and the branding that comes with your purchase.

Financing your business purchase has to be a carefully followed roadmap. In Canada the majority of franchises are financed by a special program called the CSBF program, which in fact is a program supported by the government and administered by the banks. As an owner you have to put some of your own equity into the business. The key challenge is whats the right balances for that amount – you don’t want to borrow too much, and conversely you may or may not have a huge amount of equity to put into your purchase of a new or existing franchise. We say existing franchise because it is perfectly acceptable to purchase a business, and finance it, from an existing franchisee. In some cases the financing is actually easier because there are financial statements and a finance history to the business already, as well as possible existing assets to the business.

In order to finance your franchise you require a breakdown of the different asset categories – as well as a business plan that shows cash flows and projected profits. As a business owner you should have some experience or skills related to your purchase, and we already have mentioned that fact that you must put a ‘reasonable ‘down payment into the business from your own funds. Business owners with spotty personal credit histories have a larger challenge in getting financed, as there is an emphasis on how you have run your affairs in the past.

In summary, focus on getting the right franchise that suits your skills and risk tolerance. Understand your finance plan as it relates to the purchase and ongoing needs of your business. Speak to an experienced, credible, and trusted franchise financing expert to ensure you can successfully complete your acquisition and commence your entrepreneurship journey!

--

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/franchise_financing_in_canada_today.html