Financing Solutions For Franchise Financing In Canada : Solving The Franchising Loans Challenge !

Your Crash Course In Franchise Financing Loans In Canada

OVERVIEW – Information on business finance and franchise financing in Canada. Financing solutions via franchising loans have some key requirements

Franchise Financing in Canada
is a key part of the total solution that the entrepreneur needs to put in place when considering the purchase of a new franchise or an existing unit. How do you get approved for that financing and who offers these loans? Let’s dig in.

Proper franchise financing, coupled with a solid franchise opportunity helps the entrepreneur assure financial and personal goals will be attained.

When we meet with business owners to discuss their Canadian franchise financing needs they often reveal they have contemplated purchasing their own business for quite some time but that financing was an obstacle. We firmly believe that financing should not be an obstacle to success.

The hard reality of franchise financing is actually very simple - that is that if you have a reasonable personal investment into the business ( we'll discuss' reasonable' later ) , and a decent work and credit history that are some great options for franchise financing in Canada .

Many new entrepreneurs are industry or work focused, and they don’t consider themselves ' financial types '! That simply emphasizes the point that you should be working with a trusted, credible, and experienced franchise financing advisor who can both guide you through the best solution, and in fact get you the capital that you need . It should not be any mystery that a combination of a strong proposal and application geared towards the type of financing you need almost guarantees total success.

If you don’t have a business plan or financial projection for your business you must realize you absolutely need that document. 9 out of 10 of our customers don’t have that plan, or recognize the importance of it. In that case we work with the customer, and prepare the plan based on input from you on your projected revenues, profits, expenses, etc. In our experience a winning plan is geared towards financing and not marketing and advertising.

We do get a little concerned when many new budding entrepreneurs come to us with no industry experience in the business they wish to purchase or enter into. That generally speaking is viewed as a negative, it does not mean you wont are financed, it simply means it’s a negative point that has to be taken into consideration.

Our experience in franchise financing with Canadian entrepreneurs is that a careful well thought our business plan, cash flow forecast, business summary give you a 95% chance of financing success.

In Canada our firm uses a three pronged strategy to finance franchises - we utilize the CSBF program , working capital term loans, lease financing, and oh yes, the 4th piece of the puzzle - your own investment .

We had referenced previously that your personal investment must be reasonable, there is no absolute number that can be tabled here - simply that an owner equity investment of 10 to 30, perhaps more per cent investment usually carries the approval. We can’t over emphasize that each franchise financing differs with client needs re amount, structure, types of assets being financed, etc.

So, our final bottom line - Be prepared, consider seeking out and speaking to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success . Have credible info and demonstrate you know your business. Soon you will be on the way to franchising 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 10 years - Completed in excess of 100 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 & Contact Details :
http://www.7parkavenuefinancial.com

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 '


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 Loans In Canada : Eliminating the Alligators Around Franchise Financing Requirements

It’s True , It’s Really Hard To Get A Franchise Loan .. Unless



OVERVIEW – Information on achieving successful franchise financing in Canada . Franchising loans present a unique challenge to the entrepreneur entering this aspect of Canadian business






Franchise financing needs in Canada typically, and unfortunately, comes with a significant amount of ' worry ' around the franchisees ability to successfully complete his or her transaction and begin the entrepreneurial journey. More often than not the borrower finds themselves up to their neck in ' alligators '

as they encounter issues they previously have not considered. Let's dig in.

How then do franchising loans work in Canada, what’s involved, who are the players, and what is a solid ' fast track' to approval success? All good questions we think, as well as answers we're hopefully going to offer up.

Fundamental to understanding franchise loan success is the need for the franchisee to understand that despite the fact they are buying into a proven business model their business is after all a ' start up ' and ' small business' in many respects. That translates into a financing challenge as the lender places a significant amount of emphasis on your business background, your overall financial health, which is often score carded by your credit history.

Naturally your ability to attach yourself to a larger well known franchisor is a positive, but fundamentally all franchises can be financed.

A big mistake many clients we meet have made is to assume they will be receiving some, or a lot of assistance from their franchisor in respect to financing.

Nothing could be more wrong. A number of reasons exist for that - first of all your franchisor is in the business of selling franchises, they are not a finance firm. Also, numerous legal issues exist around their ability to promise your financial success relative to the risk involved in starting any business, large or small.

So as you come out of the gate in your decision to buy into the franchise industry (currently representing a huge portion of all the Canadian economy) it’s important to identify the lenders and expertise available to yourself to complete a successful financing.

In Canada that translates into a very small contingent of specialty franchise lenders, the Canadian banks via the ' SBL ' (BIL/CSBF) program, and miscellaneous offerings by various lessors and cash flow lenders.

If you’re not comfortable in dealing with, or spending the amount of time to cultivate expertise, and you want to eliminate those ' alligators ‘! , it’s very advisable to seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can assist you with your franchise financing 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 Franchise Financing 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

Franchise Financing Canada . Four Things To Consider For Your Finance Loans

Are You Financially Savvy When It Comes To Financing Your Franchise ? Need Some Help?


Information on franchise financing in Canada . What are key considerations for franchising loans when entrepreneurs finance their business


Canadian would be entrepreneurs are very clearly jumping on the franchise 'bandwagon'. Whether they are current entrepreneurs looking to expand their investments and success, or downsized executives clearly there needs not be a lot of discussion on franchising popularity everywhere, and that includes our focus, Canada.

Could any business person, male or female not use some solid advice and mentorship on any one of the many aspects of this industry? We don’t think so, and our focus is on franchise financing in Canada. Simply speaking, achieving the finance and loans you require completing a transaction successfully.

As we said, optimism in franchising in Canada is everywhere, including positive stats on growth and the industry's participation in the economy as a whole.

Does that optimism translate into the availability of capital for financing the business? Let's cover off some key issues around that.

It's important to have a game plan when you enter into a franchise entrepreneurship. Focusing on those objectives in a precision like manner is key.
Is it possible to be familiar with every aspect of franchising that you need to know - we would submit that unless you are in the industry already that is not the case .

A good start might be two fold, first of all talking to a franchise broker or consultant who participates in the industry, and their services by the way are typically no cost to you. They are compensated by the franchisor. Naturally a word of caution is in order because many of these firms align themselves with only certain franchisors, and might not be in a position to expose you to all the opportunities and information you need.

Step two in your initial game plan might well be to talk to those people in our favorite profession, lawyers...! But seriously .. A well versed franchise lawyer will guide you through the pitfalls and legalities of owning your own franchise. The good news here is that the industry is very transparent and a lot of the rules and regulations are heavily focused on protecting you, the franchisee, when it comes to disclosure from your perspective franchisor, etc.

So let’s cover off our promised 4 key information points. Number one is simply that you need to assess the overall risk and return in your investment. While 95% of franchisees success according to many stats, you want to ensure you are not in the other 5%. Here is where you need to spend a decent amount of time on financial prospects, cash flow analysis, and measuring overall chance of success relative to the financial investment you are prepared to make as your equity contribution in the business. Suffice to say that aligning yourself with a successful and well run franchisor sure helps.

That brings us to point # 2 today, the size of your investment .Franchise purchase prices come in all size, from small non asset service based franchises to large ' bricks and mortar ' opportunities such as full service restaurants . Spend a significant amount of time on your equity contribution, where that capital comes from, and the methods under which franchise financing in Canada occurs. They exist, but they are limited.

For instance in the U.S. a large amount of financing in the industry is done under whets known as a 401k rollover, essentially collapsing what we know as our RRSP's in Canada. That doesnt work in Canada, unless you want to be penalized by the tax bit on that one! We don't recommend that to clients as you can imagine.

Point # 3 - Finance options. In Canada there are limited options to finance your purchase, of either an existing resale or a new unit are limited. The good news is that those that exist work. You can work with a specialized franchise finance firm, take advantage of the government BIL program (which finances thousands of franchises) and compliment both of these with additional leasing and working capital scenarios.

Finally, point # 4... and it's a bit of a tricky one. Do you as a franchisee require experience within the industry that you are buying into? To be honest we are not 100% sure on that one ourselves. We all agree it would be helpful to have some background in the industry you are proposing to invest into, however, we have observed over time that solid management and marketing skills go a long way in any business. Even large corporations bring in people from outside their industry, sometimes....!

Don't underestimate the advice and info you can get from a number of sources when considering purchase and finance loans alternatives. Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in this regard. 4 Points ....hopefully well taken!




Stan Prokop - founder of 7 Park Avenue Financial –


http://www.7parkavenuefinancial.

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.

Making Sense Of Franchise Loan Financing In Canada . Business Loans That Work. Business Loans For Franchising

Pitfalls and Tips on Franchise Financing In The Canadian Franchise Industry

Information on franchise financing in Canada . What issues to address for your business loan. Franchising Loans In The Canadian Marketplace.



A lot. That’s our description these days about what's happening in franchise financing. Canada has hundreds of franchising opportunities that abound; it’s just sorting through the right opportunity and matching business loan / loans to fulfill that entrepreneurial dream.

Let's sift through some of those challenges, allowing the franchisee to realize on the business ownership dream.

Many clients we talk to seem to think that a tougher economy makes it tougher to get a business loans for franchise financing in Canada. We don't necessarily feel that’s the case, if, and it’s a big if, you have done your homework and have a game plan.

That game plan includes planning, ensuring you have the expertise and sources to get your transaction completed. And all of those financial needs in many cases need to be financed differently. Those needs might include the actual franchise fee itself, financial planning that covers off your royalty fee, as well as inventory, working capital, and leaseholds and equipment.

Franchise sizes vary significantly in Canada. Many are Canadian organization, while others are units out of a U.S. parent who has a direct organization in Canada or in other cases works through a Master franchisor who has purchased a territory - Canada! (Talk about a big territory!)

Your personal resources play a significant part in your overall franchise business loan financing plan. It's important to create a personal balance sheet that allows you get a sense of your overall liquidity. Simply speaking, what you have, and what you owe.

The importance of that document can be over stated. Both franchisor and your franchising lender want to get a sense of who they are dealing with, both from a financial and business experience point of view. And by the way, your personal credit history has a huge impact on your ability to both acquire the franchise, but moreso, get it financed!

There are some interesting trends happening in the franchise industry in Canada. Many entrepreneurs are actually increasing their chances of success, (or failure) by trying to acquire multi units at the same time. We generally caution clients who are looking at multi unit deals to ensure they have the financial bench strength to go the whole process. It's absolutely critical to also ensure they have legally structured their total opportunity to ensure the failure of one unit doesn't take down their entire empire!

The other key trend we see a lot of today is that multiconcepts seem to be popular. This has the owner juggling multiple brands, typically in the QSR (quick service restaurant) industry. So if they didn't think one restaurant was enough of a challenge, how about two!

One big, now scratch that, huge mistake that franchisees make, and we see it often, is the financing of a new store out of the working capital proceeds of their other store. Inevitably Murphy's Law sets in and the resources and financial reputation of both entities are strained to the point of collapse. Our advice, consider financing each unit separately on its own merits with some additional new equity.

We can’t begin to list all the risks and rewards of a franchise opportunity in Canada. But we can ensure franchisees that careful financial planning, with expertise, is critical .Speak to a trusted credible and experienced Canadian business financing advisor on making sense of franchising opportunities in Canada. Minimize the risk, maximize the reward.





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_financing_canada_business_loan_loans.html

What’s The Cost And Return on Franchise Financing In Canada.? Franchising Loans & ROI Explained

What’s The Cost And Return on Franchise Financing In Canada.? Franchising Loans & ROI Explained


Information on franchise financing in Canada. How to factor the cost and return on investment of franchising finance loans into your business acquisition .



When we talk to clients about their concerns of getting franchise financing in Canada they also want to focus on whether the cost to finance that franchise is in effect a good ' return on investment ', in relation to both their own personal investment in the business as well as ongoing returns on that equity based on the ongoing profits of the business and the risk involved in this type of business, i.e. franchising!

The amount of capital you need to raise relative to your franchise loan varies in Canada. Factors that are critical here are the amount of capital that in some cases your franchisor might insist you put into the business. Another key factor is of course the amount of funding you are able to raise based upon your own personal financial situation, one factor of which is your personal credit rating. Clearly the majority of franchises in Canada are regarded as ' small business' so it makes sense that the banks and other firms that participate in franchise financing are focusing on you personally as well as your overall business prospects.

Canadian chartered banks, contrary to popular opinion, do participate in franchise financing in Canada. In fact in our opinion you could call them the major lender to the industry. But what many clients don’t understand when looking for franchise financing in Canada is that the bank lending in the franchising industry is done under the auspices of the Government Small Busines Loan, which is perfect suited to the type of financing you probably need.

So how much do franchises cost. We can safely say that they range in price for very nominal amounts such as 10k or so for a small service based franchise to millions of dollars for such large brand names... think ' golden arches' as an example .

Cost factors of your franchise vary with respect to how well your franchisor is doing in Canada, or perhaps it’s often the case of a franchisor in the U.S. who wishes to expand or introduce their presence in Canada.


We mentioned the government small business loan as a prime source of financing for the cost of your franchising proposal. This loan actually maxis out at $ 350,000.00 but in our experience that amount finances a huge amount of the franchise opportunities in Canada. They are great loans because they offer sensible maturities of 5-7 years, solid interest rates and nominal fees attached to the overall financing. The initial franchise fee itself is not financeable under the program, so typically our clients fund that portion themselves, which of course counts as their overall equity,


It's important to start sourcing your financing for your new franchise early on in the process. The bottom line, it’s never too late to start looking at your financing options available, including our aforementioned SBL loan.

So where does the capital come from relative to your own investment in the business.

Typically we see these funds coming from a clients own personal savings. That might also come from a severance situation based on the clients exit from ' corporate life ‘. In some cases you may choose to collapse savings, registered, or otherwise.

We encourage customers to understand the concept of financial leverage when it comes to R O I, or return on investment. Measure risk against reward; ensure you can withdraw a reasonable amount as a salary from the business, based on your financial projections.

And that ROI! Compute and analyze it just as you would any investment, such as a stock. Let’s say something costs 100% and you earn a 6% dividend. That’s generally a reasonable amount. So if you sell that investment 12 months latter your ROI is 6%. Think of that stock as being your business and the dividend being your business profits. Measure risk and reward and factor in the time and commitment you need to make into the business.

Franchising financing in Canada can be as difficult or easy as you make it. Speak to a trusted, credible and experienced Canadian business financing advisor who is expert in financing the cost of your franchising. And here's to your great, hopefully, Return on Investment!


ABOUT THE AUTHOR - STAN PROKOP

7 PARK AVENUE FINANCIAL

CANADIAN BUSINESS FINANCING



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