Canadian franchise Finance
OVERVIEW – Information on ways to successfully achieve a loan for a franchisee opportunity in Canada . Key elements of franchisee financing explained
Just when the entrepreneur comes out in you to be a franchisee in Canada a new challenge arises - how to get a loan for a franchise opportunity. At that point you have most likely made the decision that you are suited to be part of the franchise industry and have picked your industry and vertical - whether that is hospitality, a service industry, retail, etc.
That financing challenge must now fit into a budget that comprises your own equity in the transaction as well as how much money you can raise to complement the rest of the transaction. Certain things you can do properly will ultimately affect the outcome of your transaction.
The whole issue of down payment or owner equity is top of mind for most franchisees. You want to ensure you have the optimal amount of debt and equity, you don’t want to over borrow, and we’re also encouraging you, to the extent you can, to separate your personal finances from your newly incorporated business.
Awhile back we spoke with a franchisee who advised us that he had ' paid cash ' for his entire franchise. Unfortunately sales and profit objectives weren’t being met and his entire personal life vis a vis savings, credit history, etc was at risk. So that ' pride of ownership'
issue somewhat backfired on our client. Don't let that happen to you. Franchise loans and other financing you need for your venture translate, 99% of the time, into fixed monthly payments which must be met.
Ultimately you want your business plan and cash flow to reflect, and deliver on! The fact that your franchise will be able to meet its own financial obligations, as well as allow you to draw a salary and or bonus that meets your lifestyle needs.
Knowing how the bank or a franchise lender views your application gets you a great start on the road to a successful finance plan. You'll be judged on your overall character, the amount of money you have to put into the business, your business and or industry experience, and your overall past personal credit history.
The manner in which you ' sell' your financier on your franchise financing needs is reflected in your busines plan. The ability to sell your concept and background and experience, as well as business potential has to be reflected in your business plan and cash flow projections.
The issue of franchises being more risky or less risky is always a discussion point we have with both prospective franchisees as well as the finance community in general. Yes, you are of course buying into a proven business model and brand, but at the end of the day you are in many respects a new business start up.
That’s why many successful franchisees utilize the government BIL/CSBF loan to finance their business. It offers premium rates, flexible terms, a lower personal guarantee component, and can even be repaid without penalty.
Our final pearls of wisdom today?
Just the basics... spend time on the amount of funds you need, allow for reasonable time
frames to complete financing, plan for a realistic payback, and seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in complementing the financing you need to make your venture successful.
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 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/loan-for-a-franchise-opportunity-franchisee-canada.html
Stan Prokop
