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

Who Else Wants A Franchise Financing Loan ? Franchisee Info On Canadian Franchising Loans

Secrets of Success In Canadian Franchising Finance


Information on securing a franchise financing loan in Canada . Franchisee Success is about franchising loans that suit your project.




A franchise financing loan. It’s one of two things you need to successfully gain your entry intro entrepreneurship - the other is of course selecting the right franchise and being approved for it!

Franchising finance in Canada requires a focused commitment by yourself as a franchisee. It is a combination of positioning yourself as ' finance worthy ' and at the same time ensuring you create the perception that you can successfully run and grow a business in the Canadian franchising environment.

Getting that franchise loan can be a challenge and a journey if you don't have some proper preparation done in advance. And don't despair, it doesnt have to be a solo journey. You can easily amass a core team of solid help - they might include your franchise lawyer, a banker or accountant, or a Canadian business financing advisor. Their advice and experience alone can take you over the top, which in your case is.. you guessed it.. Approval.

There still exists the odd would be entrepreneur out there that thinks that 100% OPM might actually work in Canadian franchisee finance. OPM is of course ' Other People Money ' and we can categorically say that 99.999999 % (have we made out point?!) of franchise loans in Canada require an equity contribution from you, the owner.

Don't even ask your next question; we know it already: ' How much do I as an owner have to put into the business to make the financing work?". For a starter that’s partly a wrong question or assumption already because you should be thinking in terms of financing the franchise so that is has a proper combination of debt and equity... and also the ability to grow via having some working capital for operations.

The majority of franchises in Canada probably don't necessarily have an accounts receivable component... but you certainly need cash flow for inventory, operations, payroll, your salary, etc!

In Canada some very popular and established financing programs can accomplish financing your new business with only a 10% equity component - however to both qualify and be successful at the same time additional equity is often needed to make certain financial rations work.

In certain cases your franchisor might be able to steer you towards some financing success - either through a referral or relationships they have established sources. The mistake here is that franchisees sometimes assume this either guarantees approval, or that the franchisor in some manner will support or guarantee the financing. A word of advice from experience - this is not the case!

Actually though the best co-signer in Canada has stated they are willing to guarantee the majority of your financing. What? We can see the expression on our clients faces as we make that statement. However in reality it's true, because the government of Canada in fact guarantees the financing they make under the Canadian BIL / CSBF program. And the majority of franchises in Canada are in fact financed in this manner. Talk about some great help!

We view getting a successful franchise financing loan as the ' hard aspect' of getting your franchising dream in place. Their is a ' soft' component to all this of course ; for example presenting yourself professionally, demonstrating your experience, and ensuring you have a crisp and complete proposal in place.

Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with franchisee financing in this exciting industry component of the Canadian economy.





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_loan_franchising_franchisee.html

What Types Of Loans Are Available For A Canadian Franchisee When Financing A Franchise ?

Successfully Navigate Franchise Finance in Canada



Information on financing a franchise in Canada . Does a Canadian franchisee have options when it comes to types of loans and finance that are available ?



What types of loans can a franchisee in Canada expect to attain when he or she is financing a franchise in the Canadian market? Even more importantly how do you qualify and access that financing?

Those are typical questions clients ask us all the time , so lets examine some critical info that will allow you to be successful in completing a franchise finance acquisition.

A good way to start is to build up a bit of a ' checklist ' on what you need to both investigate a franchise opportunity, as well as to present a finance proposal for that opportunity.

We add also that you have the option of course of purchasing a franchise from an existing franchisee, or working directly with the franchisor on a new unit acquisition. There is a big difference in purchasing an existing franchise for a number of reasons, some good, some not so good. First of all an existing unit of course allows you to independently validate the financial results and assets of that business, that’s a good thing. Your accountant, a Canadian business financing advisor, lawyer, or appraiser can assist in various ways to validate the true value of your purchase.

When you are financing an existing franchise it is important to ensure you are completing the transaction as an ' asset sale ' as opposed to a ' share sale '. It is extremely difficult, if not impossible to finance a share sale arrangement.

When you are financing a franchises types of loans dictate what will be financed and how. The key aspects of any franchise acquisition revolve around the following: the franchisee fee, the royalty arrangement, equipment, leaseholds, and sometimes forgotten ' working capital ' to ensure the future growth and health of the business.

If your franchise requires that you have physical leased premises it is critical to ensure that the term of the lease for those premises will at least match the term of the loan financing you are hoping to achieve. Simply speaking, a franchisee can’t get a 5 year loan for a business that has a one year lease! Makes sense, right?

Prior to starting to focus on the financing of your new business and life as an entrepreneur you should of course have completed what the legal and business folks call ' due diligence ' on your franchisor . That might include references from another franchisee, whether they are compliant with franchise regulations in Canada how royalties are paid and structured, etc. The bottom line? There are a lot of rights (and obligations) for you and the franchisor... ensure you understand wha they are.

As we referenced earlier start up capital and final approval can be challenging if you are not well armed with info and resources. In Canada the banks and some other institutions, (but mostly the banks) are the ' approved lenders' for the government BIL/CSBF program.

The vast majority of franchises in Canada are financed under this program. You would be totally missing the boat if you did not at least investigate why this program is one of the best methods of financing a franchise in Canada. The simple reason - just that it has great rates, terms, structures, repayment without penalty ability, and yes, even a low personal guarantee or ' covenant ' requirement.

Maximize your financing potential as franchisee by speaking to a trusted, credible and experienced Canadian business financing advisor who can help you navigate a path to entrepreneurial financing 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/financing_a_franchise_types_of_loans_franchisee.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!

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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