Franchise Finance Funding In Canada : No Hiding Here When It Comes To Franchisee Financing Basics

Welcome to Franchise Loan Boot Camp!

OVERVIEW – Information on franchise financing basics in Canada. How does the entrepreneur achieve successful franchisee finance solutions when entertaining the purchase of a new or existing franchise



Franchise financing basics in Canada. Is there a ' boot camp ' we might be able to attend to learn more about ‘successful’ franchisee finance solutions in Canada. We're giving you free admission, so let's dig in!

Boot camp. It's really a place where people go to learn some basic skills we're told, and so it’s a good analogy for the Canadian entrepreneur and would be franchisee searching for financing options for their business.

While our great Canadian banks have some great commercials and websites around franchisee financing support in Canada in fact it's very rare they would finance a tier 2 or tier 3 franchise directly - so, so much for that commercial! They are very quick; we would point out, to finance the tier one franchises that are huge ' brands' with very limited chance of business failure. (HINT - Think hockey player/donuts or Clown/hamburgers... ' Billions served').

So what then must the franchisee do to locate the appropriate financing for a new turnkey or existing franchise? Franchises can be purchased and financed when they exist already because the franchisor is converting a corporate store to a franchise, or an existing franchisee has permission to sell the business to you. Another Hint - Don't forget to check out why he or she is selling!

So it's back to our entrepreneur searching for the franchise loan that makes sense for their business. Some key fundamentals need to be in place to source the small handful of financing solutions available in Canada in this industry. By the way, they are great solutions; they are just limited so you as a franchisee have to know what they are and who offers them.

Prior to entering the door

to franchise lending a few fundamentals must be in place. The entrepreneur/business person must ensure they have a reasonable personal credit rating as well as the resources to muster a down payment or equity contribution in the business. That ranges from anywhere from 10-50% based on the type of franchise you are buying, the amount of financing you need, the perceived risk in the transaction , or simply the requirement that certain franchisors place on franchisee equity contributions.

While sometimes the franchisee might feel that the down payment requested is onerous it's often driven by the franchisors experience in the amount of capital required to make a franchise successful. Certain industries carry a lot more risk than others from the lenders and franchisors perspective - a good example is hospitality.

We see a lot of clients initially spending all their time focusing on getting initial financing for their franchise, often forgetting that down the road they will need working capital, new assets, and potentially leasehold refurbishment to stay competitive.

Don’t forget also you absolutely must have a solid business plan, cash flow forecast, and some level of management or business experienced related to your new venture.

Have we forgotten anything? Oh yes, its actual franchise finance solutions!! They include the one or two specialty franchise finance firms that provide turnkey financing. The other popular, and more attainable solutions is utilizing the Govt small business loan which is perfected suited to franchisee finance as it covers assets and leaseholds required to get your business going.

That’s the boot camp overview. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with franchise financing basics that makes sense to achieve successful entrepreneurship in the Canadian franchise industry which is such a key part of our economy these days.




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 :


7 Park Avenue Financial = Franchise Loan Financing Expertise




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CONTACT:

7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8

Phone = 905 829 2653

Email = sprokop@7parkavenuefinancial.com

Stan Prokop

Essential Franchisee Finance . Here’s How To Master A Franchise Financing Loan In Canada

Canadian Franchise Loans – Uncovered!


OVERVIEW – Information on being successful with a franchise financing loan in Canada . Proper franchisee finance is critical to your new business success .




It's that time... you're looking for a franchise financing loan for your business purchase in the Canadian business environment. Need franchisee finance assistance? Let's look at what you need to know... and do!

Unlike our good friends in the U.S. the Canadian franchisee entrepreneur has, frankly, somewhat more limited options when it comes to financing their business purchase.

While in the states specialized franchise finance firms abound, along with a number of types of banks that could facilitate your purchase the Canadian borrower quickly finds that not only will his franchisor not provide direct financing .. no surprise there ... but equally as challenging is the fact that only about 4 solutions exist in Canada for your franchise loan.

What you need to do is really focus on your franchisee loan as if you were purchasing any other business, either existing, or new, i.e. your franchisee rights and a turnkey solution offered by your franchisor or master franchisor.

What does that mean?Simply that it is back to the basics , which includes a business plan, the ability to demonstrate some operational skills and mgmt. experience, as well as being able to clearly identify that you can contribute the required ' equity component ' or down payment to your deal.

In finance there is a term called Sources and Uses ... it couldn’t be more basic... identifying where you will get your funds from, and then clearly itemizing each individual use.

What are those uses? It's of course the franchise fee, equipment, leasehold improvements, inventory, working capital, and in some cases, depending on what franchise you are buying, real estate.

The new franchisee is often so caught up and focused on getting a franchise loan that the last thing they are thinking about is short or intermediate term working capital needs... ie the fuel that will finance the business on a daily basis. It's all those basics, wages and salaries, lease and loan payments, and products and supplies.

So who are the actual franchise lenders in Canada? It boils down essentially to our traditional banks, the government small business loan, commercial leasing and finance companies and in the Canadian environment, 1 or two very specialized franchise financiers that are independent commercial finance firms.

A couple of notes about the players we have just mentioned. The traditional Canadian chartered bank rarely finances a new franchise on its own merits. That is because whether you agree or not the business is viewed as a small business and a start up, with no proven revenues, cash flows, and profits to substantiate the loan. Again, you might think otherwise, but the bank respectfully differs!

By far the majority of franchises in Canada are financed by the specialized BIL loan that is a government guaranteed loan. One note is that this loan has a 350k limit, so not all franchises can be fully financed in this manner.

If the specialized franchise finance firm doesn't have a true program arrangement with your franchisor you may also find a lack of interest in completing a transaction successfully.

Speak to a trusted, credible and experienced Canadian business financing advisor on who can best assist you in your franchisee finance needs.

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_financing_loan_franchisee_finance.html